1. Suppose in a two-good society with Good X and Good Y, a consumer has a utilit
ID: 1136904 • Letter: 1
Question
1. Suppose in a two-good society with Good X and Good Y, a consumer has a utility function of U(x, y)- min{2x,y], where r is the number of Good X the consumer consumes and y is that of Good Y. The consumer has a wealth level of 12. The price of Good X is 2 and the price of Good Y is 1. What is the consumer's utility maximization consumption bundle! a. 4 units of Good X and 4 units of Good Y. b. 4.8 units of Good X and 2.4 units of Good Y. c. 3 units of Good X and 6 units of Good Y. d. 4 units of Good X and 8 units of Good Y.Explanation / Answer
Goods are complementary ;
2x = y
X = y/2
Px.X +Py*Y = 12
2*y/2 +Y = 12
2Y = 12
Y = 6
X = 6/2
= 3
Hence, right answer is : (C)
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