Question in ozland the price of milk is 4l and the price of, Ask an Expert

Economics

Question: In Ozland, the price of milk is 4/L, and the price of water is 10/L. Ozland is famous for equality because every resident in Ozland has a wealth of $17.

Suppose Anne's utility function is u{x₁, x₂) = 17x₁ + 20x₂, where x₁ is the litres of milk and x₂ is litres water that she consumes. How many litres of milk should Anne consume to maximise her utility?

Anne's twin sister Arabella unfortunately have slight lactose intolerance, her utility function is u(x₁, x₂) = 1x₁ + 20x₂, how many litres of water should Arabella consume to maximise her utility?

Bill is a heavy addict of a popular drink called the Long White Milk, which is a mix of milk and water. And he has a strict requirement for its recipe - his utility function is u(x₁, x₂) = min{5x₁, 21x₂}. What is the optimal quantity of water for Bill?

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Microeconomics, Economics

Category:- Microeconomics
Reference No.:- M92597824

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