Suppose April has the following quasilinear utility function from soda x and other stuff M: U(x, M)
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Question:
Suppose April has the following quasilinear utility function from soda x and other stuff M: U(x, M) = 10 x + M. The price per unit of soda is $p, and the price of other stuff is $2 per unit. April has an income of Y = 100. Assume that soda is a continuous good.
Assuming an interior solution, show that April's optimal quantity of x is x = 100 p2 . Explain why p must be great than 2 for the optimum to be interior
Related Book For
Calculus For Business, Economics And The Social And Life Sciences
ISBN: 9780073532387
11th Brief Edition
Authors: Laurence Hoffmann, Gerald Bradley, David Sobecki, Michael Price
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