UES TION 16 A consumer consumes two commodities, m and n, and has a utility function...

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UES TION 16 A consumer consumes two commodities, m and n, and has a utility function z = mn. The price of M is Pm- $10 and th

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Answer 1

Answer #1

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Consumer consumes m units of 1 commodity and n units of other commodity and their corresponding prices are 10 and 40.

Income of the consumer is 180. Given unity function is u = mn

$du du dm = m = n and dn$

$mn and Mm=2$

At optimal bundle

$Mum 10 MRSafort m MRTaforb= Mm 40 Ph m$

Therefore second option is correct

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Answer 2

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UES TION 16 A consumer consumes two commodities, m and n, and has a utility function...

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