A maximizing consumer with preferences u = x^(1/2)+ y^(1/2) pays pY= 4 and pX= 4 and spends 24 dollars on these goods. Next month the price of good y will fall to pY= 2. Provide an Indifference Curve Diagram to illustrate and quantify her optimal choices as Bundles A and B. Quantify all intercepts.

A maximizing consumer with preferences u = x^(1/2)+ y^(1/2) pays pY= 4 and pX= 4 and spends 24 dollars on these goods. Next month the price of good y will fall to pY= 2. Provide an Indifference Curve Diagram to illustrate and quantify her optimal choices as Bundles A and B. Quantify all intercepts.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter3: Preferences And Utility

Section: Chapter Questions

Problem 3.1P

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