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Ezra's Utility Function Is U = XY, Where MUX =

Question 120

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Ezra's utility function is U = XY, where MUX = Y and MUY = X. In Lancaster, Pennsylvania, Ezra's income would equal $500, and the prices of good X and good Y are $5 and $5, respectively. In Washington, D.C., Ezra's income would equal $800, and the prices of good X and good Y are $8 and $10, respectively. Where should Ezra live? Show your work.

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In Lancaster, set MRS = Px/Py.
Y/X = 5/5 (...

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