Mary's preferences over X and Y correspond to the following utility function: U(X,Y) = XY³. Suppose that her income is M=$80 and that the market price of X is Px=$2, while that of Y is Py=$4 a. Find and plot her budget line, clearly indicating the intercepts and the slope. b. The marginal utility of X is MUx=Y³, while that of is MUy=3XY?. Compute and show Mary's optima consumption bundle on the same graph. c. Find her utility at her optimal consumption bundl specifying the amount of satisfaction she derives from the Tast unit of each good purchased.
Mary's preferences over X and Y correspond to the following utility function: U(X,Y) = XY³. Suppose that her income is M=$80 and that the market price of X is Px=$2, while that of Y is Py=$4 a. Find and plot her budget line, clearly indicating the intercepts and the slope. b. The marginal utility of X is MUx=Y³, while that of is MUy=3XY?. Compute and show Mary's optima consumption bundle on the same graph. c. Find her utility at her optimal consumption bundl specifying the amount of satisfaction she derives from the Tast unit of each good purchased.
Micro Economics For Today
10th Edition
ISBN:9781337613064
Author:Tucker, Irvin B.
Publisher:Tucker, Irvin B.
Chapter6: Consumer Choice Theory
Section: Chapter Questions
Problem 3SQP
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Transcribed Image Text:Mary's preferences over X and Y correspond to
the following utility function: U(X,Y) = XY³.
Suppose that her income is M=$80 and that the
market price of X is Px=$2, while that of Y is
Py=$4
a. Find and plot her budget line, clearly indicating
the intercepts and the slope.
b. The marginal utility of X is MUx=Y³, while that of Y
is MUy=3XY?. Compute and show Mary's optimal
consumption bundle on the same graph.
c. Find her utility at her optimal consumption bundle,
specifying the amount of satisfaction she derives
from the last unit of each good purchased.
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