A consumer purchases two goods, x and y and has utility function U(x; y) = x y. For this utility function MUx=y and MUy= x. The price of x is px= 2 and the price of y is py= 4. The consumer has M units of income to spend on the two goods and wishes to maximize utility, given the budget.<\/p>
<\/p>
Show that for M=100 units of income, the combination x=20, y=15 is affordable, but that it is not the best possible combination for this consumer. (Hint: compare the MRS with the price ratio.)<\/p>", "transcribed_text": "", "related_book": { "title": "Contemporary Mathematics", "isbn": "1711470554, 978-1711470559", "edition": "1st Edition", "authors": "OpenStax", "cover_image": "https:\/\/dsd5zvtm8ll6.cloudfront.net\/si.question.images\/book_images\/64d470aca1d44_40187.jpg", "uri": "\/textbooks\/contemporary-mathematics-1st-edition-9781711470559", "see_more_uri": "" }, "free_related_book": { "isbn": "0394856392", "uri": "\/textbooks\/the-berenstain-bears-and-the-messy-room-0394856392-123521", "name": "The Berenstain Bears And The Messy Room", "edition": "" }, "question_posted": "2024-06-13 08:20:48", "see_more_questions_link": "\/study-help\/questions\/business-marketing-2022-June-08", "step_by_step_answer": "The Answer is in the image, click to view ...", "students_also_viewed": [ { "url": "\/the-following-table-lists-the-20-largest-companies-in-the", "description": "The following table lists the 20 largest companies in the world in 2013 ranked by their market capitalizations (in billions of dollars). 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