Question

Hans has $27 which he decides to spend on x and y. Commodity x costs $16 per unit and commodity y costs $10 per unit. He has the utility function U(x, y) = 2x^2 + 2y^2 and he can purchase fractional units of x and y. Hans will choose ___

(A) Only x item.
(B) Only y item.
(C) Both x and y.

Answer 1

The answer is B. Good luck

Answer 2

(B) Only y item

Explanation:

The utility function is symmetrical with respect to x and y, so they each have the same utility. Hans will choose to purchase y only, as it is the least expensive.