An individual's utility is given by: U (q1, q2) = a(q1)+ b(q2), where a and b are constants. When prices are P1= 4 and P2=1, the individual can only maximize utility by purchasing all good #
An individual's utility is given by: U (q1, q2) = a(q1)+ b(q2), where a and b are constants. When prices are P1= 4 and P2=1, the individual can only maximize utility by purchasing all good #
Chapter7: Consumer Choice: Maximizing Utility And Behavioral Economics
Section: Chapter Questions
Problem 6QP
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An individual's utility is given by: U (q1, q2) = a(q1)+ b(q2), where a and b are constants. When prices are P1= 4 and P2=1, the individual can only maximize utility by purchasing all good #2. When the prices are P1=3 and P2=1, the individual can only maximize utility by consuming all good #1.
Which of the following statements below must be true?
A. Goods #1 and #2 are complements
B. a < b
C. 3 < a/b <4
D. The indifference
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