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(Solution Library) Lou’s preferences over pizza (x) and other goods (y) are given by U(x,y) = xy, with associated marginal utilities MU_x = y and MU_y =

Question: Lou’s preferences over pizza (x) and other goods (y) are given by U(x,y) = xy, with associated marginal utilities \[M{{U}_{x}}\] = y and \[M{{U}_{y}}\] = x. His income is $120.

  1. Calculate his optimal basket when \[{{P}_{x}}=\\(4\] and \[{{P}_{y}}=\\(1\]
  2. Calculate his income and substitution effects of a decrease in the price of food to $3

Price: $2.99
Solution: The downloadable solution consists of 2 pages
Deliverable: Word Document


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