Maximum amount of utility he will receive at the optimum

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Reference no: EM13983898

Suppose Lyle's utility function is U= XY + X + Y, X,Y greater than or equal to 0

a) Derive Lyle's generalized demand function for goods X and Y in terms of Px, Py, and I

Now suppose Px=5, Py=10, I=100

b) Determine the optimal quantities of X and Y that Lyle should purchase as well as the maximum amount of utility he will receive at the optimum

c) Are X and Y normal or inferior goods? Why?

d) Are X and Y substitutes or complements? Why?

Reference no: EM13983898

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