• anonymous
Can someone assist me with this question please? If utility function is U (X,Y) = 4X^(1/2) Y^(1/2) and the budget constraint is$150; price of X is $10/unit and price of Y is $5/unit; X and Y are in units. a. Find the optimal bundle X and Y that the consumer should buy to maximize his utility.
Economics - Financial Markets
  • Stacey Warren - Expert
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  • chestercat
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  • anonymous
Seti - how much mathmatics do you know? You could set up a constrained maximization problem with 150=10X + 5Y as the constraint and the utility function as the function to be maximized. Try going to Wolfram Alpha at type in "maximize 4X^1/2Y^1/2 subject to 150 = 10X+5Y. If you play around with the price of X and see how the optimal X changes, you can graph the demand for X.

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