Question

Suppose an individual had a utility function given by: U=XY^2. Suppose that Bundle A contains 5 units of Good X and 5 units of Good Y. Bundle B contains 2 units of Good Y and an unknown quantity of Good X. Calculate the amount of Good X that would make the individual indifferent between Bundle A and Bundle B. (Round to the nearest three decimal places if necessary.)

Answer 1

Bundle A : (X,Y) = (5,5)

B : (X,Y) = (X,2)

Individual will be indifferent between two bundles, if he gets the same utility from two bundles

UA = UB

5*5² = X*2²

125 = 4X

X = 31.25