Assume a consumer with the utility function U U
Assume a consumer with the utility function
U = U (X, Y) = (X + 2)(Y + 1)
and the budget constraint (M = 95, Px = 10, and Py = 5):
95 = 10X 15Y
a. Set up the constrained maximization problem, and derive the first-order conditions.
b. Find the amounts of goods X and Y the consumer will purchase in equilibrium.

Membership TRY NOW
  • Access to 800,000+ Textbook Solutions
  • Ask any question from 24/7 available
    Tutors
  • Live Video Consultation with Tutors
  • 50,000+ Answers by Tutors
OR
Relevant Tutors available to help