Jeff is deciding his optimal consumption bundle, where there are two possible goods he could purchase. He can consume good x and good y, both of which are priced at $1. His utility function can be given by U(x,y) = 2x^2 (y^2)

a.) Find his optimal consumption bundle if he has $100 to spend

b.) What is his optimized utility?

c.) Suppose his income doubles to $200. What are the income and substitution effects, in terms of the good x?

d.) Suppose the price of good x were to double instead. What would be the income and substitution effects in terms of good x?

Answer rating: 100% (QA)

a To find the optimal consumption bundle when Jeff has a budget of 100 to spend we can set up the fo... View the full answer