Joan has a monthly income of €100 that she allocates to two goods: meat and potatoes. Suppose meat costs €4 per pound and potatoes €2 per pound. Suppose also that her utility function is given by the equation U (M, P) = 2M + P. An outbreak of potato rot raises the price of potatoes to €4 per pound. What combination of meat and potatoes maximizes her utility? A. M = 25, P = 0 B. M = 20; P = 30 C. M = 20; P = 10 D. Any combination of meat and potatoes that satisfies her budget constraint

Joan has a monthly income of €100 that she allocates to two goods: meat and potatoes. Suppose meat costs €4 per pound and potatoes €2 per pound. Suppose also that her utility function is given by the equation U (M, P) = 2M + P. An outbreak of potato rot raises the price of potatoes to €4 per pound. What combination of meat and potatoes maximizes her utility? A. M = 25, P = 0 B. M = 20; P = 30 C. M = 20; P = 10 D. Any combination of meat and potatoes that satisfies her budget constraint

Microeconomics

13th Edition

ISBN:9781337617406

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter7: Consumer Choice: Maximizing Utility And Behavioral Economics

Section: Chapter Questions

Problem 6QP

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