Solution-Matthew utility function, Matthew's utility

Matthew utility function

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Mathew has the utility function U = √XY (where Y represents bananas and X represents ham burgers), income of $20, and is deciding how to allocate that income between bananas and ham Burgers. Ham Burgers cost $1.00 and bananas cost $1.25 each.

a) Matthew's utility function implies that the marginal utility of bananas is 0.5 √X/Y and the marginal utility of ham burgers is 0.5 √Y/X. How many bananas will Matthew buy? How many ham burgers will he buy?

Reference no: EM131188825

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Matthew utility function

Reference no: EM131188825

Reference no: EM131188825

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