Ambrose's brother Bartholomew has an income of $114 and a utility function U(x₁, x₂)= 32x^1/2₁ + x₂.The price of good 1 (nuts)is $4 and the price of good 2 (berries)is $1.How many units of nuts will Bartholomew demand?

Question

Quizplus · Accepted Answer

Bartholomew's demand for nuts can be found by maximizing his utility function with respect to the number of nuts he consumes. Taking the partial derivative of the utility function with respect to the number of nuts, setting it equal to 0 and solving for x₁, we get: 16x₁ = 114/4 x₁ = 2.25 Since Bartholomew can only purchase whole units of nuts, he will demand 2 units of nuts, which is the closest integer value to 2.25. Therefore, the answer is C) 16.

Ambrose's Brother Bartholomew Has an Income of $114 and a Utility