The utility function for an individual is given as u (x; y)= xy. Suppose that his income is S 100 and the price of Good Y is S 10 per unit. However, Good X is priced somewhat different. It is priced as follows: The first 6 units cost S 10 per unit and any additional units cost S 5 per unit. a) Draw this individual's budget constraint. b) What consumption bundle will this individual choose?

Micro Economics For Today
10th Edition
ISBN:9781337613064
Author:Tucker, Irvin B.
Publisher:Tucker, Irvin B.
Chapter6: Consumer Choice Theory
Section: Chapter Questions
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The utility function for an individual is given as u (x; y)= xy. Suppose that his income is $ 100 and the price of Good Y is
$ 10 per unit. However, Good X is priced somewhat different. It is priced as follows: The first 6 units cost $ 10 per unit and
any additional units cost $ 5 per unit.
a) Draw this individual's budget constraint.
b) What consumption bundle will this individual choose?
Transcribed Image Text:The utility function for an individual is given as u (x; y)= xy. Suppose that his income is $ 100 and the price of Good Y is $ 10 per unit. However, Good X is priced somewhat different. It is priced as follows: The first 6 units cost $ 10 per unit and any additional units cost $ 5 per unit. a) Draw this individual's budget constraint. b) What consumption bundle will this individual choose?
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