Re: Micro-consumer theoryy

Posted by Amit Goyal on Jan 29, 2014; 12:40pm
URL: http://discussion-forum.276.s1.nabble.com/Micro-consumer-theoryy-tp7584570p7584604.html

ICs are concave and utility is increasing in both x and y implying there will be a corner optimum. He has two options:
Consuming only x: utility = 6*(40/13)^2 = 56.8
Consuming only y: utility = 4*(40/11)^2 = 52.9

Answer is (a) Ollie will choose only x.