Question
Sandy receives utility from consuming berries (X) and nuts (Y) as given by utility function u(X,Y)=XY. The price of berries is $7 per box and
Sandy receives utility from consuming berries (X) and nuts (Y) as given by utility function u(X,Y)=XY. The price of berries is $7 per box and the price of nuts is $10 per pack.
She spends her entire income to buy 60 boxes of berries and 23 packs of nuts.
Therefore, compared to her optimal bundle, she is currently consuming (too many/not enough/just the right amount of) berries.
Please note that, as usual, we allow goods to be divisible, i.e. Sandy's optimal bundle could consist of, for example, 4.2 boxes of berries and 3.7 packs of nuts.
Please submit:
- 1 for too many
- -1 for not enough
- 0 for just the right amount of
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