Using the prices and income given at b) above, find your optimal consumption choice bundle (Marshallian demand) and its corresponding utility level. d) Illustrate your optimal consumption choice on a graph. e) For the prices given in b), what income would you need to achieve a utility level of 25? PLEASE ONLY ANSWER PART C, D AND E
Using the prices and income given at b) above, find your optimal consumption choice bundle (Marshallian demand) and its corresponding utility level. d) Illustrate your optimal consumption choice on a graph. e) For the prices given in b), what income would you need to achieve a utility level of 25? PLEASE ONLY ANSWER PART C, D AND E
Microeconomics A Contemporary Intro
10th Edition
ISBN:9781285635101
Author:MCEACHERN
Publisher:MCEACHERN
Chapter6: Consumer Choice And Demand
Section: Chapter Questions
Problem 6QFR
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Question
Suppose your utility for goods x1 and x2 is represented by the following utility function:
U(x1,x2)= x11/5 x24/5
a) What is your marginal rate of substitution, MRS12?
b) If the price for good x1 is p1 = 2, the price for good x2 is p2 = 4, and your available income is m = 20, write down your budget constraint.
c) Using the prices and income given at b) above, find your optimal consumption choice bundle (Marshallian demand) and its corresponding utility level.
d) Illustrate your optimal consumption choice on a graph.
e) For the prices given in b), what income would you need to achieve a utility level of 25?
PLEASE ONLY ANSWER PART C, D AND E
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