Question

An individual utility function is given by U(x,y) = x·y1/2. This individual demand equation for x...

An individual utility function is given by U(x,y) = x·y1/2. This individual demand equation for x is a factor a of I/px: x* = a (I/px). In this specific case, factor a is equal to [a]. (NOTE: Write your answer in number format, with 2 decimal places of precision level; do not write your answer as a fraction. Add a leading zero and trailing zeros when needed.)

Homework Answers

Answer #1

U = X.Y.1/2

= Y/2

= X/2

Condition to get X*

MUx/Px = MUy/Y

Y/2Px=X/2PY

gives YPy=XPx

PY=XPx/Y

I=PxX+PyY

putting value of Py we get

I=XPx+XPx

I=2XPx

X*=I/2Px

a is 1/2

a=0.5

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