Question

Suppose, you have a utility function u(X1,X2) = X1 X2. Your budget constraint is 3X1+2X2= 60.

X1 and X2 are the amount of consumption of the two goods. Find the equilibrium level of utility.

Answer 1

$3X_1+2X_2=60,$

$X_1=X_2,$

$3X_1+2X_1=60,$

$5X_1=60,$

$X_1=X_2=12.$