Suppose a consumer with income I has preferences over consumption bundles that canbe represented by the utility function U(X,Y) = XY. Suppose the price of X,px, is 1 and the price of Y, py, is 2. At the consumer's optimal consumption bundle,(X*,Y*), what must the value of the ratio be?(a) 10(b) √5(c) 4(d) 2(e) 8

Utility function : U = X1/5 Y4/5Price of X = 1Price of Y = 2 Income = I Budget Constraint : I =…

Suppose a consumer with income I has preferences over consumption bu XY. Suppose th be represented by the utility function U(X,Y) px, is 1 and the price of Y, py, is 2. At the consumer's optimal consum (X*, Y*), what must the value of the ratio be? (a) 10 X* =

Suppose a consumer with income I has preferences over consumption bu XY. Suppose th be represented by the utility function U(X,Y) px, is 1 and the price of Y, py, is 2. At the consumer's optimal consum (X, Y), what must the value of the ratio be? (a) 10 X* =

ENGR.ECONOMIC ANALYSIS

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Chapter1: Making Economics Decisions

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Question

Suppose a consumer with income I has preferences over consumption bundles that can
be represented by the utility function U(X,Y) = XY. Suppose the price of X,
px, is 1 and the price of Y, py, is 2. At the consumer's optimal consumption bundle,
(X*,Y*), what must the value of the ratio be?
(a) 10
(b) √5
(c) 4
(d) 2
(e) 8

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