Compute the associated c value from the budget constraint

Reference no: EM133706609

Question: Assume that a = 101. Supposing for a moment that the minimum housing-consumption constraint were absent, how large a dwelling would the consumer rent? The answer is found by setting the indifference-curve slope expression equal to the slope of the budget line from (a) and solving for 9. Note that this solution gives the tangency point between an indifference curve and the budget line. Is the chosen q smaller than 500? Illustrate the solution graphically.

Compute the associated c value from the budget constraint, and substitute c and a into the utility function to compute the consumer's utility level.

Reference no: EM133706609

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