Y7

Robinson Crusoe who is marooned on an island in the South Pacific. He can grow bananas and coconuts. If he uses z1 acres to produce bananas and z2 acres of land to produce coconuts, the outputs of bananas and coconuts are x1 = 4 z1, x2 = z2. There are b acres of usable land. Robinson Crusoe's preferences are represented by the utility function U = f(x) = x1x2. (a) Get optimal level of inputs (z1, z2) in terms of b. (b) Obtain an expression for maximized utility for all b.