Question
Using data from household surveys, you have determined that the 'typical' household's preferences are represented by the utility function, U = (x + 24)y, where
Using data from household surveys, you have determined that the 'typical' household's preferences are represented by the utility function, U = (x + 24)y, where x represents the quantity of fruit and vegetables consumed, and y represents the quantity of the composite good consumed. The associate marginal utilities are, MUx = y and MUy = x + 24. The price of fruit and vegetables is Px = $10 per kg, and the price of the composite good is normalised to Py = 1.(The voucher must implement the government's target of 5kg of fresh fruit and vegetables consumed per week, while minimising the cost of the vouchers to the government)
Step 3: What is the lowest level of income at which a household's consumption of fruit and vegetables will meet the Government's target?
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