Asked by
Benjamin Morgan
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 $.10, 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) 0.40.
B) 3.40.
C) 2.40.
D) 1.90.
E) 1.40.
Cow Feed
Materials fed to cattle, including grass, grains, and sometimes supplements, to maintain or improve health and production.
Consumption
The action of using goods and services to satisfy needs or wants.
- Gain insight into the principles of utility functions and their capacity to illustrate consumer preferences.
- Comprehend the effect of optimizing utility on consumer preferences within the framework of fiscal constraints.
Verified Answer
TC
Learning Objectives
- Gain insight into the principles of utility functions and their capacity to illustrate consumer preferences.
- Comprehend the effect of optimizing utility on consumer preferences within the framework of fiscal constraints.