Ilkkas income is 120 and he spends it on two goods x and y, Econometrics

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Ilkkas income is 120 and he spends it on two goods x and y

Ilkka's income is $120 and he spends it on two goods, X and Y. His utility function is U = XY. Both X and Y sells for $2 per unit.

(a) Calculate Ilkka's utility-maximizing purchases of X and Y.

(b) How will his utility change if his income decreases by $2.00?

(c) If the price of X increased by 44%, with no change in the price of Y, by how much would his income have to increase to enable him to maintain his initial level of utility (as in part (a) above?

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Econometrics: Ilkkas income is 120 and he spends it on two goods x and y

Reference No:- TGS0584683

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Econometrics: Ilkkas income is 120 and he spends it on two goods x and y

Reference No:- TGS0584683

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