Question

Maurice has the following utility function: U(X, Y) = 20X+80Y-X^2-2Y^2 Where X is his consumption of CDs with a price of $1 and Y is his consumption of movie videos with a rental price of $2. He plans to spend $41 on both forms of entertainment. Determine the marginal utility of increasing consumption of X, keeping consumption of Y constant. Determine the marginal utility of increasing consumption of y, keeping X constant. Hence, determine the marginal rate of substitution between x and y. What is Maurice's budget constraint? What is the slope of his budget constraint? Determine the number of CDs and video rentals that will maximize Maurice's utility.

Answer 1

Answer:

Explanation:

7 Cd abd 17 movie videos maximize the utility function in 873

Explanation:

We solve this using excel solver:

 A           B          C         D

1.-          CD Movie

2.- Price 1   2

3- Q         7       17

4.- Subtotal 7 34    41

The subtotal are  Price per quantity on each product

and then we add them to get the total.

The we write the utility function

=20*B3+80*C3-POWER(B3;2)-2*POWER(C3;2)

Utility 873  

We will maximize hat function by changin cell B3 and C3

with the constrain of D4 lower or equalt to 41