(Answered) Gingers utility function is ux y x2 y with associated

Management Studies

Ginger's utility function is U(x, y) x2 y, with associated marginal utility functions MUx 2xy and MUy x2 . She has income I 240 and faces prices Px $8 and Py $2.

a) Determine Ginger's optimal basket given these prices and her income.

b) If the price of y increases to $8 and Ginger's income is unchanged, what must the price of x fall to in order for her to be exactly as well off as before the change in Py?

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