1. Given utility function U(x,y) = X1/4Y3/4, Where price of X=8Br and Price of Y = 2 Br and income of the consumer is 480 Br;
A. Compute the utility maximizing level of X and Y
B. Calculate the marginal rate of substitution of X to Y at equilibrium and interpret the result
C. Compute the total utility at equilibrium
A. The utility maximizing level of X and Y;
"MU_x=0.25x^{-0.75}y^{0.75}"B. The marginal rate of substitution of X to Y at equilibrium;
"\\frac {\\partial U}{\\partial x \\partial y} =\\frac {0.1875\\times y^{0.5}} {(x)^{0.5}}"C. The total utility at equilibrium;
="30^{0.25}\\times120^{0.75}"
=84.85
Comments
Leave a comment