Asked by
Lauren Hancock
on Oct 14, 2024
Verified
Ambrose's utility is U(x1, x2) 4x1/21 x2.If the price of nuts (good 1) is $1, the price of berries (good 2) is $4, and his income is $104, how many units of nuts will Ambrose choose?
A) 67
B) 128
C) 64
D) 10
E) 32
Utility Function
A mathematical representation that ranks an individual's preference for different combinations of goods or outcomes.
Budget Constraint
The limit on the consumption bundles that a consumer can afford to purchase, based on their income and the prices of goods and services.
Income
Income that is earned from work or investments, which is typically received at regular intervals.
- Apply the concept of utility maximization to select the best possible consumption combinations.
- Scrutinize the effect of price shifts on consumption behaviors.
- Apply the understanding of budget constraints in the framework of consumer decision-making.
Verified Answer
MN
Learning Objectives
- Apply the concept of utility maximization to select the best possible consumption combinations.
- Scrutinize the effect of price shifts on consumption behaviors.
- Apply the understanding of budget constraints in the framework of consumer decision-making.