Suppose a consumer has the following utility function: U=XY if P,=1 and P,=2 and Income =...

 

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Suppose a consumer has the following utility function: U=XY¹ if P,=1 and P,=2 and Income = 300 1) Find the optimum quantities of X and Y that the consumer will purchase. (8 marks) (In your solution you should begin by stating the two conditions that must be met.) 2) In precisely what sense is this combination of X and Y an equilibrium? (2 marks) 3) What is the maximum satisfaction that this utility-maximizing consumer can achieve? (3 marks) 4) Illustrate the solution on the diagram. (2 marks) Suppose a consumer has the following utility function: U=XY¹ if P,=1 and P,=2 and Income = 300 1) Find the optimum quantities of X and Y that the consumer will purchase. (8 marks) (In your solution you should begin by stating the two conditions that must be met.) 2) In precisely what sense is this combination of X and Y an equilibrium? (2 marks) 3) What is the maximum satisfaction that this utility-maximizing consumer can achieve? (3 marks) 4) Illustrate the solution on the diagram. (2 marks)

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