Ambrose's utility is U(x₁, x₂)= = 4x^1/2₁ + x₂.If the price of nuts (good 1)is $1, the price of berries (good 2)is $6, and his income is $186, how many units of nuts will Ambrose choose? A)288 B)144 C)147 D)7 E)72

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Quizplus · Accepted Answer

Given the prices and income, Ambrose's consumption choice can be determined by solving the utility maximization problem subject to his budget constraint. The utility function is not clearly defined due to the formatting, but the solution involves dividing the income by the sum of the prices of goods weighted by their consumption ratio or preferences. Without the specific utility function, we apply the budget constraint: Income = P1*X1 + P2*X2. Given P1=$1, P2=$6, and Income=$186, and assuming a simple case where all income is spent, if Ambrose spends all his money on nuts (good 1), he could buy 186 units. However, the correct answer must account for the optimal allocation between nuts and berries, which isn't directly calculable from the given information. The choice of 144 units suggests a specific allocation that maximizes his utility given the prices and his income, likely derived from a utility maximization problem that isn't fully visible due to the formatting issue.

Ambrose's Utility Is U(x1, X2)= = 4x1/21 + X2

Ambrose's Utility Is U(x₁, X₂)= = 4x^1/2₁ + X₂