Asked by
bella gannascoli
on Oct 14, 2024
Verified
Ollie has a utility function U(x, y) (x 2) (y 3) .The price of x is $1 and the price of y is $1.When he maximizes his utility subject to his budget constraint, he consumes positive amounts of both goods.Ollie consumes
A) exactly as many units of x as of y.
B) 1 more unit of x than he consumes of y.
C) 1 more unit of y than he consumes of x.
D) 2 more units of x than he consumes of y.
E) None of the above.
Budget Constraint
A line representing the combination of goods and services that a consumer can purchase with a given income.
Utility Function
A mathematical representation of how consumers derive satisfaction or utility from consuming goods and services.
Goods
Tangible products or items that satisfy human wants or needs.
- Utilize mathematical constructs to identify superior consumption choices.
- Become versed in the critical concepts pertaining to optimal selection and the increase in utility.
Verified Answer
SD
Learning Objectives
- Utilize mathematical constructs to identify superior consumption choices.
- Become versed in the critical concepts pertaining to optimal selection and the increase in utility.