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Problem: Suppose that Marty has a utility function given by: U=X^0.6*Y^0.2. Marty has a budget of$480 to spend on Good X which has a price of $12.00 per unit and Good Y which has a price of $24.00 per unit.
1. Write the function for the marginal utility of Good Y. _________________ MUY= 0.2X^0.6*Y^-0.8
2. Calculate the Market Rate of Substitution (MktRSXY). ___________________ MktRS= 0.5
3. Determine the quantity of Good X that Marty will purchase in his utility-maximizing bundle for the budget constraint given above. _________ 30 units of Good X
Answers are to the right of the problem. Please explain how to solve them and show all work. (No graphing)
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