Assume a consumer with the utility function U = U (X, Y) = (X + 2)(Y +

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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.

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Managerial Economics Foundations of Business Analysis and Strategy

ISBN: 978-0078021718

11th edition

Authors: Christopher Thomas, S. Charles Maurice

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Question Posted: Nov 18, 2014 04:20 AM

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Assume a consumer with the utility function U = U (X, Y) = (X + 2)(Y +

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a L X 2 Y 1 95 10X 5Y FOC Y 1 10 0 X 2 5 ...View the full answer

Managerial Economics Foundations of Business Analysis and Strategy

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