Frank\'s utility function is U = 10x + 6y. Frank has a budget of dollar 60 to sp

Question

Frank's utility function is U = 10x + 6y. Frank has a budget of dollar 60 to spend an goods X and Y. The price of good X is dollar 3 and the price of good Y is dollar 2. How many units of good X and good Y does frank purchase? X = 20 and Y = 0 X = 10 and Y = 20 X = 0 and Y = 10 X = 15 and Y = 5 Suppose that U = min(2X, 0.5Y), where X is units of good X and Y is units of good T. The price of good X is dollar 1 and the price of good Y is dollar 2. What is the minimum expenditure necessary to achieve a utility level of 1007. Dollar 450 dollar 333.33 dollar 550 dollar 1, 200

Explanation / Answer

Answer 14:

Option A. Since the indifference curve is a straight line with constant slope, the equilibrium point will occur at the boundary or either on the Y or X axis. In this case, Option A satisfies the equation X * Px + Y * Py =60

Answer 15:

Option A.

min (2X , .5 Y )= 100

X = 50 and Y = 200

So, expenditure = 50 * 1 + 200 * 2 = $450

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