Homework Help: microeconomics

Posted by jon on Friday, September 21, 2007 at 9:19am.

Suppose a person has a utility function U=YX. What is the minimum level of income required to get a utility of 20? Your answer should be a function of, among other things, Px and Py.

microeconomics - economyst, Friday, September 21, 2007 at 10:44am
Let Z be income = Px*X + Py*Y
You could say:

Minimize Z=Px*X+Py*Y
subject to the constraint that X*Y=20

or you could say:

Maximize U=X*Y
subject to the contstraint that Px*X+Py*Y=20

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