Question: Please Solve 2. Consumer Theory. Ahn's utility function for goods X (pizzas) and Y (cola) is represented as U(X, Y) = 2in(X)+In(Y). The prices of
Please Solve

2. Consumer Theory. Ahn's utility function for goods X (pizzas) and Y (cola) is represented as U(X, Y) = 2in(X)+In(Y). The prices of X and Y are $1 and $1, respectively. Ahn's income is $12. 1) Calculate Ahn's optimal consumption bundle (X*, Y*). 2) Suppose there is an increase in the price of X. Illustrate the net effect, income effect, and substitution effect on Ahn's optimal consumption choice
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
