Question: The utility function of Sylvie is given by: U = x 1 x 2 + 2 x 1 + 2 x 2 where x 1

The utility function of Sylvie is given by:
U=x1x2+2x1+2x2
where x1 and x2 represent her level of consumption of goods 1 and 2. She has 50 GBP to spend on goods 1 and 2. The unit prices of these goods are 1 and 2, respectively.
Find the optimal levels of x1 and x2 that Slyvie will consume to maximise her utility. Which of the following statements are true?

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!

Q:

(20 points) Clarice is an expected utility maximizer and her utility function over money is given by u = x 1 2 . Clarice's friend, Hannibal, has offered to bet with her $1,000 on the outcome of the...

Q:

Please answer all questions with explanations Consumer Choice Model 1. Elizabeth has the following utility function for goods X and Y: U =X Y. Her income is $300 per unit of time, the price of X...

Q:

Boyle industries makes a product using some toxic chemicals that when too much water is added, destroys the product. The production manager, Charles, estimates that the probability the water...

Q:

hhhhhhhhhh Consider the following figure. The blue dot labelled X, Y represents how much X and Y is currently being produced in the economy. Good Y PPF X. Y ICB ICA Good X Which of the following...

Q:

Question 3 (a) (b) (C) ('1) Show that as the number of assets in a portfolio increases portfolio risk decreases. [5 marks] Show that the portfolio opportunity set that emerges from a combination of a...

Q:

Explain why there is little adverse selection in Employer based health insurance programs, compared to the non-group private market for health insurance. 2. Suppose that in a country with a generous...

Q:

(15 points) Alannah and Bobbi are identical consumers in a pure exchange economy. Their preferences are given by U(xi) = (x 1 i)(x 2 i) for i = A,B (i.e. Alannah and Bobbi have identical...

Q:

Quantitative Finance I - DFA1232 (1) Question 4 (35 marks) (1) Obtain the Maclaurin's expansion of In (1 + ex) as far as the fourth degree terms. (1i) Consider a one-year zero coupon bond paying $...

Q:

Okay, so suppose you only consume only two goods, x and y , and your utility function is described as u equals u , x and y equals xy . Suppose your income is $ 36 , the price of x is $ 2 , and the...

Q:

Use the following to answer questions 5-7: Investment Expected Return E(r) Standard Deviation 1 0.12 0.3 2 0.15 0.5 3 0.21 0.16 4 0.24 0.21 U = E(r) 0.5A? 2 , where A = 3.5. _____ 5. Based on the...

Q:

In a two-player zero sum game, the matrix below shows the value to Player 1. Player 1's strategies are labelled I to VI, where Player 2's strategies are labelled A to F. (i) I II III IV V VI A 13 18...

Q:

It was only the other night everything was fine and the next thing I know I'm drowning. How many times can a man go down and still be alive? I can't breathe. There's Beatty dead, and he was my friend...

Q:

Multiple Choice 1 . 5 points Which of the following statements is true? One way to increase the effective utilization of a bottleneck is to reduce the number of defective units. In a factory...

Q:

When a person is in his home and acts in self-defense, is he subject to the same limitations on his use of force as he would be if he were not in his home?