Please answer to all parts A,B,C 1. Suppose a consumer's utility function is u(x,y) = 20 In(x) + y. The prices are p, = P, = 1. Income is m = 100 a. Find the utility-maximizing bundle for this consumer. b. Suppose p, increases to 2, other things the same. Find the new utility-maximizing bundle. c. Given the new relative prices from part (b), find the expenditure-minimizing bundle that gives the same utility as the bundle found in part (a).
Please answer to all parts A,B,C 1. Suppose a consumer's utility function is u(x,y) = 20 In(x) + y. The prices are p, = P, = 1. Income is m = 100 a. Find the utility-maximizing bundle for this consumer. b. Suppose p, increases to 2, other things the same. Find the new utility-maximizing bundle. c. Given the new relative prices from part (b), find the expenditure-minimizing bundle that gives the same utility as the bundle found in part (a).
Chapter7: Consumer Choice: Maximizing Utility And Behavioral Economics
Section: Chapter Questions
Problem 6QP
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Transcribed Image Text:Please answer to all parts A,B,C
1. Suppose a consumer's utility function is u(x,y) = 20 In(x) + y. The prices are p, = p, = 1. Income is m = 100.
a. Find the utility-maximizing bundle for this consumer.
b. Suppose p, increases to 2, other things the same. Find the new utility-maximizing bundle.
c. Given the new relative prices from part (b), find the expenditure-minimizing bundle that gives the
same utility as the bundle found in part (a).
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