Question

Suppose a consumer had a utility function given by: U=X0.5Y. If the price of Good X (Px) is $1 and the price of Good Y is $2 then what is the utility maximizing quantity of Good Y the consumer will purchase with a budget of $24?

Answer 1

Ques - U=0.5xynos fx- $1 Py - $2c me $24 : . Budget live Eqno Prox & Py.y = m . 1(e) & aly) = 24 intay = y 1 L

By Lapange t- uchyl + a[am- Pock-Pyry] - osxy ta [24-x-2y] first order_condition Oh = 0.5y + a (-1) ☺ aL - 0.5x + 7 (-2) ob - 24_3-24 © I put ah and al ao & de o a r gre gy 0.59 & I we get, ↑ . Q4 - xt Divide both eah we get ay-ax

/ razy in Budget fqin put get we - Atly = gy Zy + 2y = 24 3241 Hence utility Mariniung Quantity of yis 6 buit Lidgetline mouth TIC é 12 24