Answered: then find out the quantity of x and y…

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Economics

then find out the quantity of x and y that will maximize utility.

Microeconomics

13th Edition

ISBN:9781337617406

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter7: Consumer Choice: Maximizing Utility And Behavioral Economics

Section: Chapter Questions

Problem 6WNG

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Concept explainers

Form Utility

The term utility in general refers to the satisfaction earned from usage of a particular product or service. Utility always plays an important role because it influences various important elements like demand & thereby the price of the good or service as well. Though utility is not easy to measure, various types of economic models can be used indirectly. There can be various types of utilities like economic utility, marginal utility, cardinal utility, form utility.

Question

Consider the following utility function: U(x,y)= min{x+2y, 2x+y}. If a person’s income is $100 and px=$10, py=$20, then find out the quantity of x and y that will maximize utility.

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