Kim spends all her weekly income of R200 on two goods, X and Y. The prices of the two goods are R5 per unit for X and R2 per unit for Y. She has a utility function expressed as: U(X, Y) = 5XY Express the budget equation mathematically. Determine the utility-maximising bundle of X and Y. Calculate the total utility that will be generated per unit of time for this individual.

Microeconomics
13th Edition
ISBN:9781337617406
Author:Roger A. Arnold
Publisher:Roger A. Arnold
Chapter7: Consumer Choice: Maximizing Utility And Behavioral Economics
Section: Chapter Questions
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Kim spends all her weekly income of R200 on two goods, X and Y. The prices of the two goods are R5 per unit for X and R2 per unit for Y. She has a utility function expressed as:

U(X, Y) = 5XY

  1. Express the budget equation mathematically. 

  2. Determine the utility-maximising bundle of X and Y. 

  3. Calculate the total utility that will be generated per unit of time for this individual.

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