2. Assume that a consumer has the utility function U(x,y) = 3x+y, where x and y

Question

2. Assume that a consumer has the utility function U(x,y) = 3x+y, where x and y represent the quantities of two goods, X and Y. The consumer has I=$60 to spend on the two goods, and good Y costs py=$2 per unit. The price of good x, px , is also exogenous.

(a) With good X on the horizontal axis and good Y on the vertical axis, draw the indifference curve for utility level U=6. Show the exact coordinates of at least two points on the curve. On the same diagram similarly draw the indifference curves for the utility levels U=18 and U=30.

Explanation / Answer

U = 3X + Y

6 = 3X + Y

Coordinates are (0,6) and 2,0)

U = 3X + Y

18 = 3X + Y

U = 3X + Y

30 = 3X + Y

Related Questions

Navigate

• Browse (All)
• Browse 2
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.