Suppose that your tastes over coke(X1) and burgers(X2) can be summarized by the utility function: u(X1, X2) = (X12X2)1/3. (a) Calculate the optimal quantity of coke and burgers' consumption as a function of P1, P2and I. (b) Illustrate the optimal bundle A when P1 = 2, P2 = 10 and weekly income I = 180. What numerical label does this utility function assign to the indifference curve that contains bundle A? (c) Using your answer, show that both coke and burgers are normal goods when your tastes can be summarized by this utility function.

Suppose that your tastes over coke(X1) and burgers(X2) can be summarized by the utility function: u(X1, X2) = (X12X2)1/3. (a) Calculate the optimal quantity of coke and burgers' consumption as a function of P1, P2and I. (b) Illustrate the optimal bundle A when P1 = 2, P2 = 10 and weekly income I = 180. What numerical label does this utility function assign to the indifference curve that contains bundle A? (c) Using your answer, show that both coke and burgers are normal goods when your tastes can be summarized by this utility function.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter4: Utility Maximization And Choice

Section: Chapter Questions

Problem 4.13P

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