Question

Please show work:

3. Ollie has a utility function u(x, y) = (x + 2)(y + 3). The price of x is $1, and the price of y is $1. When he maximizes his utility subject to his budget constraint, he consumes positive amounts of both goods. In what proportion does Ollie consume goods x and y?

Answer 1

MUN = on 37 Whility funshon Un, y) = (x + 2)(4+3) = ny+3x+2y+6 budget line x+y=M. at equa on 13 - 1 an 4+3 =2+2 on y=n-1 put Mis in budget line a-1 + x = M . on 2n= M +1 .. na- and ya Mt) 1 = 42 proparon of consumporan cef goods and M+) M-1