Question
Aaron consumes only 2 goods: avocados (a) and bread (b). His utility function is U(a,b)=ab, with MU a =b and MU b =a. The price
Aaron consumes only 2 goods: avocados (a) and bread (b). His utility function is U(a,b)=ab, with MUa=b and MUb=a. The price of avocados is $4 and Aaron’s income is $24. He spends his entire income on his current consumption bundle of two avocados and eight loaves of bread.
a) What is the price of a loaf of bread?
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Intermediate Microeconomics
Authors: Hal R. Varian
9th edition
978-0393123975, 393123979, 393123960, 978-0393919677, 393919676, 978-0393123968
