Asked by
Culumanco Tshobonga
on Dec 01, 2024
Verified
Lolita's utility function is U(x, y) =x - x2/2 + y, where x is her consumption of cow feed and y is her consumption of hay.If the price of cow feed is $.30, the price of hay is $1, and her income is $2 and if Lolita chooses the combination of hay and cow feed that she likes best from among those combinations she can afford, her utility will be
A) 2.24.
B) 1.70.
C) 0.24.
D) 3.24.
E) 1.24.
Utility Function
A mathematical representation of a consumer's preference ranking for bundles of goods, showing the level of satisfaction derived from each bundle.
Cow Feed
A type of animal feed specifically formulated to meet the nutritional needs of cows.
Consumption
The act of using up goods and services to meet personal or collective needs or desires, typically measured within an economy over a period.
- Understand the concept of utility functions and how they represent consumer preferences.
- Learn how utility optimization impacts consumer choices under budget constraints.
Verified Answer
AP
Learning Objectives
- Understand the concept of utility functions and how they represent consumer preferences.
- Learn how utility optimization impacts consumer choices under budget constraints.