Andy purchases only two goods, apples (a) and kumquats (k). He has an income of $ 40

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Andy purchases only two goods, apples (a) and kumquats (k). He has an income of $ 40 and can buy apples at $ 2 per pound and kumquats at $ 4 per pound. His utility function is U(a, k) = 3a + 5k. That is, his constant marginal utility for apples is 3 and his constant marginal utility for kumquats is 5. What bundle of apples and kumquats should Andy purchase to maximize his utility? Why?

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Managerial Economics and Strategy

ISBN: 978-0321566447

1st edition

Authors: Jeffrey M. Perloff, James A. Brander

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