Homework Answers
At the tangency of utility function and PPF, slopes are equal
2 * 2x / 2 * 2y = y / x
x^2 = y^2
Use this in PPF
2y^2 + 2y^2 = 150
y = (150/4)^0.5 = 6.1237
This also gives x = 6.1237
Hence the utility level is U = 6.1237*6.1237 = 37.5.
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