Question 1

Madam Lim consumes only two goods: Kopi (good x) and Kuih (good y).1Her utility over the two goods is given by U(x, y) = ln x+ 2 ln y.Madam Lim is a retiree and has no income. However, her dutiful daughter-in-law, Priscilla, gives her an allowance every week to spend on the two goods. The price of Kuih remains at $1 each through out this exercise.

Madam Lim's sister, Angela, has the following utility function U(x, y) = min{x, y}. The prices of Kopi (x) and Kuih (y) are $3 and $5, respectively. What is the minimum expenditure that allows Angela to attain the utility U= 7?