Jeff is deciding his optimal consumption bundle, where there are two possible goods he could purchase....
Jeff is deciding his optimal consumption bundle, where there are two possible goods he could purchase. He can consume good x and good y, both of which are priced at $1. His utility function can be given by U(x,y) = 2x^2 (y^2)
a.) Find his optimal consumption bundle if he has $100 to spend
b.) What is his optimized utility?
c.) Suppose his income doubles to $200. What are the income and substitution effects, in terms of the good x?
d.) Suppose the price of good x were to double instead. What would be the income and substitution effects in terms of good x?
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