Question
Amy loves fancy and fashionable outfits. She never wears an outfit twice. She has a utility function takes the form U ( x , y
Amy loves fancy and fashionable outfits. She never wears an outfit twice. She has a utility function takes the formU(x,y) =x1/2y1/2=xy, wherexstands for the number of "new outfits" andyis the amount of "Other goods" essential to her living. That is to say, Amy's marginal utilities for new outfit and other goods are:
1.MUx=1/2square rootx/y
MUy=1/2square rootx/y
this question it related to the one below
Question : (b)Draw Amy's budget constraint on another graph with necessary details, with"Supreme jackets" on the horizontal axis. (Hint: this graph needs to be reasonably accurate.)
please answer this question.
(c)Based upon the information given, what is Amy's optimal consumption bundle? What is her utility level at this optimal bundle? Show your work with necessary details.
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