Donna and Jim are two consumers purchasing strawberries and chocolates. Jim’s utility function is U (x, y) = xy and Donna’s utility function is U (x, y) = x2y where x denotes strawberries and y denotes chocolates. Jim’s marginal utility functions are MUX=y and MUy=x while Donna’s are MUX=2xy and MUy=x2 . Jim’s income is $100, and Donna’s income is $150. What is the optimal bundle for Donna if the price of strawberries is $2 and the price of chocolate is $4? What is the optimal bundle for Jim, and for Donna, when the price of strawberries rises to $3?
Donna and Jim are two consumers purchasing strawberries and chocolates. Jim’s utility function is U (x, y) = xy and Donna’s utility function is U (x, y) = x2y where x denotes strawberries and y denotes chocolates. Jim’s marginal utility functions are MUX=y and MUy=x while Donna’s are MUX=2xy and MUy=x2 . Jim’s income is $100, and Donna’s income is $150. What is the optimal bundle for Donna if the price of strawberries is $2 and the price of chocolate is $4? What is the optimal bundle for Jim, and for Donna, when the price of strawberries rises to $3?
Chapter3: Preferences And Utility
Section: Chapter Questions
Problem 3.11P
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uestion1:
Donna and Jim are two consumers purchasing strawberries and
chocolates. Jim’s utility function is U (x, y) = xy and Donna’s utility
function is U (x, y) = x2y where x denotes strawberries and y denotes
chocolates. Jim’s
Donna’s are MUX=2xy and MUy=x2
. Jim’s income is $100, and Donna’s
income is $150. What is the optimal bundle for Donna if the
strawberries is $2 and the price of chocolate is $4? What is the optimal
bundle for Jim, and for Donna, when the price of strawberries rises to
$3?
Question2:
Consider a one-period eco
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