In Exercise 26, how does the maximum utility change if k is increased by 1 dollar?

Data from Exercises 26

A consumer has k dollars to spend on two commodities, the first of which costs a dollars per unit and the second b dollars per unit. Suppose that the utility derived by the consumer from x units of the first commodity and y units of the second commodity is given by the Cobb-Douglas utility function U(x, y) = x^αy^β, where 0  

Transcribed Image Text:

x = ka a and y = kß b