Answer to Question #309281 in Math for Geki

Question

A consumer has the utility function over goods X and Y,

U(X, Y) = √x + √y

Let the price of good X be given by PX, let the price of good Y be given by PY, and let

income be given by M.

(a) Derive the consumer’s Marshalian demand functions for good X and good Y. (5)

(b) Is good Y normal or inferior? (3)

(c) If PX = 2, PY = 1, and M = 12, compute the utility maximizing consumption bundle of

goods X and Y.

Answer 1

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