Gingers utility function is uxy x2y .prices are px8 and, Ask an Expert

Economics

Ginger's utility function is $U(x,y) = x^{2}y$ .Prices are Px=8 and Py=2 and Income is I=240.

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

b)If Py increases to 8 and Ginger's income is unchanged, what must the Px fall to in order for her to be exactly as well off as before the change in Py. (hint: solve for the total utility in a) and then keep that constant to solve for the new Px)

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Macroeconomics, Economics

Category:- Macroeconomics
Reference No.:- M9472837

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