Calculate utility at the optimal consumption point

Reference no: EM133706651

Question: Assume that Robert's utility from consuming different quantities of x1 and x2 is given by the following function U(x1, x2) = min{2x1, 5x2} Assume the price of x1 (p1) is £15, the price of x2 (p2) is £10 and he has a budget of £380 to spend on the two goods. a. What type of preferences does this utility function represent? Use the numbers in the utility function to explain your answer. b. Calculate the consumption bundle that will maximise Robert's utility (You must clearly show all working and explain the economic intuition to receive marks for this question). Illustrate and explain your answers on a well labelled indifference curve diagram and calculate utility at the optimal consumption point.

Reference no: EM133706651

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