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Lolita's Utility Function Is U(x, Y)= X - X2/2

Question 27

Multiple Choice

Lolita's utility function is U(x, y) = x - x2/2 + y, where x is her consumption of cow feed and y is her consumption of hay.If the price of cow feed is $.10, the price of hay is $1, and her income is $2 and if Lolita chooses the combination of hay and cow feed that she likes best from among those combinations she can afford, her utility will be


A) 2.40.
B) 3.40.
C) 0.40.
D) 1.90.
E) 1.40.

Correct Answer:

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