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Vascos utility function is: U = 10x²z The price of X is px = $2, the price of Z is pz = $4, and his income is $60. What is h

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Answer #1

U= 10X^2Y
MUx = 20XY
MUy= 10X^2
At optimum, MUx/MUy = Px/Py
20XY/10X^2 = 2/4
2Y/X = 1/2
X = 4Y
BUDGET : Px*X + Py*Y = I
2*4Y + 4Y = 60
Y= 5

X= 4*5= 20

X0 = 20

Y0= 5

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