Problem 1 Suppose that a consumer has an income of $80 that she would like to spend on two goods x and y to maximize her utility. The market prices of the goods are P = $4 and P, = $3 per unit, respectively. The consumer's utility function is given by U (x, y) = x0.7y0.3. Determine the consumer's utility maximizing choice of x and y. Hints: Determine the marginal rate of substitution (MRS) from the utility function and marginal rate of transformation (MRT) from the budget line. Set MRS = MRT and solve for y: y on the LHS and others on the RHS. Substitute the expression of y in the budget equation and solve for x. Substitute the value of x in the expression of y that you got from MRS = MRT.

Question 1a Homework Unanswered - Due Today, 11:59 PM How many units of good X will the consumer buy? Type your numeric answer and submit Question 1b Homework Answered - Due Today, 11:59 PM How many units of good Y will the consumer buy? Type your numeric answer and submit Problem 1 Suppose that a consumer has an income of $80 that she would like to spend on two goods x and y to maximize her utility. The market prices of the goods are Px =$4 and Py=$3 per unit, respectively. The consumer's utility function is given by U(x,y)=x0.7y0.3. Determine the consumer's utility maximizing choice of x and y. - Hints: - Determine the marginal rate of substitution (MRS) from the utility function and marginal rate of transformation (MRT) from the budget line. - Set MRS = MRT and solve for y:y on the LHS and others on the RHS. - Substitute the expression of y in the budget equation and solve for x. - Substitute the value of x in the expression of y that you got from MRS = MRT