Suppose a consumer’s utility function is given by U(X,Y) = X1/2*Y1/2. Also, the consumer has $72 to spend, the price of Good X, PX = $1, and the price of Good Y, PY = $1. a)How much X and Y should the consumer purchase in order to maximize her utility? b)How much total utility does the consumer receive? c) Now suppose PX increases to $9. What is the new bundle of X and Y that the consumer will demand?

Suppose a consumer’s utility function is given by U(X,Y) = X1/2*Y1/2. Also, the consumer has $72 to spend, the price of Good X, PX = $1, and the price of Good Y, PY = $1. a)How much X and Y should the consumer purchase in order to maximize her utility? b)How much total utility does the consumer receive? c) Now suppose PX increases to $9. What is the new bundle of X and Y that the consumer will demand?

Micro Economics For Today

10th Edition

ISBN:9781337613064

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter6: Consumer Choice Theory

Section: Chapter Questions

Problem 25SQ

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