Answer to Question #289975 in Microeconomics for PARAM

Question

Find the optimal commodity purchased by a consumer whose utility function and budget constraints are U=(q1)^2 (q2)^2 and 4q1 + 8q2= 96 respectively

Answer 1

The commodity purchased by a consumer is optimal, when:

$MU1/P1 = MU2/P2$ and 4q1 + 8q2= 96.

MU1 = U'(q1) and MU2 = U'(q2), so we need to know the prices p1 and p2 to find optimal commodity.