Question #245281

1.      Company consumes two goods X and Y, her utility function is given by the equation

U= 60XY2.The current market price for X is 200 birr, while the market price for y is 100birr and her current Income is 10,000birr

A.     Sketch a set of two Indifferent curves for Company in her consumption of X and Y 

B.     Write the expression for Company's budget constraint graph the budget constraint and find the slope

C.     Determine the X, Y combination that maximizes her utility given her budget constraint

Calculate the Impact on Company's optimum consumption of X and Y If the price of X increase to 300birr.


1
Expert's answer
2021-10-01T12:23:57-0400
200x+100y=10,000200x+100y=10,000

MUx=60y2MU_x=60y^2

MUy=120xyMU_y=120xy

y=4xy=4x

x=17x=17

y=68y=68

If price of good X will be 300, then


x=11x=11

y=66y=66


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