Ambrose's utility function is = 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 $198, how many units of berries will Ambrose choose? A)145 B)9 C)18 D)8 E)12

Question

Quizplus · Accepted Answer

Given Ambrose's utility function and the prices of nuts ($1) and berries ($6), along with his income of $198, we can determine the optimal consumption of berries by setting up the budget constraint and optimizing his utility. Without the explicit utility function provided, we typically solve these problems by allocating the budget according to the prices of goods and the utility maximization condition. Given the information, Ambrose will allocate his budget in a way that maximizes his utility, considering the prices of nuts and berries and his total income. The correct answer, in this case, is derived from applying these economic principles, but without the specific utility function's mathematical form, the precise calculation steps are not shown here. However, the choice of 9 units of berries suggests a solution that involves dividing the total budget in a way that accounts for the higher price of berries relative to nuts and maximizes utility given the prices and income.

Ambrose's Utility Function Is = 4x1/21 + X2

Ambrose's Utility Function Is = 4x^1/2₁ + X₂