Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Korra has a utility function UA (X 1 , X 2 ) = [X 1 + 2) x (X 2 +3] 2 She has income
Korra has a utility function UA (X1, X2) = [X1 + 2) x (X2+3]2
She has income m and faces prices P1 and P2 fo goods 1 and 2 respectively. Find her optimal consumption bundle.
a. X*1 = m+2P1 - 3P2/2P1 , X*2 = m-2P1+3P2/2p2
b. X*1 = m-3P1 + 2P2/3P1, X*2 = m+3P1-2P2/3P2
c. X*1= m-3P1 + 2P2/2P2, X*2 = m+3P1-2P2/2P1
d. X*1 = m+2P1 - 3P2/3P2, X*2 = m-2P1+3P2/3P1
e. none of thee options
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started