Suppose Alex has the following utility function defined over goods x and y. U (x, y) = xy +10x a. Write out the expression for his indifference curve with y in terms of x and U. b. Assume Alex's current level of utility is U = 80 and plot the indifference curve for this level of utility for values of x between 2 and 12. c. Suppose Alex has $30 to spend on these two goods and x costs $5 per unit while y costs $1.00 per unit. Add Alex's budget constraint to your graph. Visually determine the combination of these two goods that Alex will purchase.
Suppose Alex has the following utility function defined over goods x and y. U (x, y) = xy +10x a. Write out the expression for his indifference curve with y in terms of x and U. b. Assume Alex's current level of utility is U = 80 and plot the indifference curve for this level of utility for values of x between 2 and 12. c. Suppose Alex has $30 to spend on these two goods and x costs $5 per unit while y costs $1.00 per unit. Add Alex's budget constraint to your graph. Visually determine the combination of these two goods that Alex will purchase.
Micro Economics For Today
10th Edition
ISBN:9781337613064
Author:Tucker, Irvin B.
Publisher:Tucker, Irvin B.
Chapter6: Consumer Choice Theory
Section6.A: Indifference Curve Analysis
Problem 3SQP
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