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Suppose Xiomara has a utility function.: u(x1,x2,x3) = 2(x1)^0.2 + min(x2,x3) The prices of all three goods are identical at $2 per unit. Xiomara has
Suppose Xiomara has a utility function.:
u(x1,x2,x3) = 2(x1)^0.2 + min(x2,x3)
The prices of all three goods are identical at $2 per unit. Xiomara has no money to spend this month (Y= 0) but already has 2 units ofx1, 4 units ofx2, and 6 units ofx3. If I give her a $10 gift certificate to spend ononeof the goods (to supplement the amount she already has), which good should she spend it on?
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