Point of tangency with his budget constraint

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Mr. Odde Ball enjoys commodities x and y according to the utility function U(x,y) = √x^2 + y^2

(a) Graph Mr. Ball’s indifference curve and its point of tangency with his budget constraint, given by pxX + pyY = I. What does the graph say about Mr. Ball’s behavior? Have you found a true maximum?

(b) Maximize Mr. Ball’s utility if px = $3, py = $4; and he has $50 to spend. Hint: It may be easier here to maximize U^2 rather than U. Why will this not alter your results?

Reference no: EM131246775

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