A consumer derives utility from two goods (x and y), and her utility function is in the form u(x,y) = xy. Her income is 120 TL, and the prices of x and y are both 1 TL: a) Find the quantities of x and y that maximizes her utility. b) Derive the demand functions for x and y.
A consumer derives utility from two goods (x and y), and her utility function is in the form u(x,y) = xy. Her income is 120 TL, and the prices of x and y are both 1 TL: a) Find the quantities of x and y that maximizes her utility. b) Derive the demand functions for x and y.
Chapter7: Consumer Choice: Maximizing Utility And Behavioral Economics
Section: Chapter Questions
Problem 1WNG
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A consumer derives utility from two goods (x and y), and her utility function is in the form u(x,y) = xy. Her income is 120 TL, and the prices of x and y are both 1 TL:
a) Find the quantities of x and y that maximizes her utility.
b) Derive the demand functions for x and y.
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