Kims utility function is given by U = 5X + 2Y, where MUX = 5 and MUY
Question:
a. Suppose that at the prices PX and PY of good X and good Y, respectively, Kim is consuming (optimally) some positive amount of good X and some positive amount of good Y. What is the price of good X in terms of the price of good Y?
b. How will her consumption change if PX doubles, while PY does not change?
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Step by Step Answer:
a We know that MRS XY MU X MU Y P X P Y so that P X MU X MU Y P Y 25 P Y b ...View the full answer
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Related Book For 
Microeconomics
ISBN: 9781464146978
1st Edition
Authors: Austan Goolsbee, Steven Levitt, Chad Syverson
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