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microeconomics

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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 -

    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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