Question: N4 Diego's utility function is U (q1, q2) = q0.751 q0.252 , where q1 is chocolate candy and q2 is slicesof pie. If the price

N4

Diego's utility function is U (q1, q2) = q0.751 q0.252 , where q1 is chocolate candy and q2 is slicesof pie. If the price of a chocolate bar, p1, is $1, the price of a slice of pie, p2, is $2, and Y is$80, what is Diego's optimal bundle? Consider that:

M U1 = U/q1= 0.75 q0.251 q0.252

M U2 = U/q2= 0.25 q0.751 q0.752

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Economics Questions!