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4. Assume that the utility function of a given agent is given by: U(X,Y) = log X + Blog Y. And that this agent faces the foll
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Answer #1

At optimal point,

MUX/MUY = PX/PY

(1/X) / (1/Y) = 10/8

8Y = 10X ...(1)

Budget cost line:

C = px.x + py.y

100 = 10X + 8Y

Using (1)

100 = 10X + 10X

X = 5 and Y = 6.25 units

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