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How do I solve this? Suppose that consumers spend their income on either health insurance or on a composite good (a collection of all other
How do I solve this? Suppose that consumers spend their income on either health insurance or on a
"composite good" (a collection of all other goods that a consumer wants). Find the
optimal bundle of health insurance (HI) and other goods (G) given the following
budget constraint and utility function. Make sure to show how you arrived at your
answer. How much utility does this bundle give the individual?
Budget constraint: 1000 = 100*HI + 25*G
Utility function: U=HI*G where MRS = -G/HI
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