Ask your own question, for FREE!
Economics - Financial Markets 26 Online
OpenStudy (anonymous):

Consider a consumer who can consume either A or B, with the quantities being denoted by $a$ and $b$ respectively. If the utility function of the consumer is given by $$-[(10-a)^2+(10-b)^2]$$(suppose prices of both goods are equal to $1$), then solve for optimal consumption of the consumer when his income is $40$. My approach: I have the problem: $$max(-[(10-a)^2+(10-b)^2])$$ $$s.t.\ a+b \le 40,\ a\ge 0,\ b\ge 0.$$ Looking at the objective function, we see that it's maximum value is $0$ when $a=b=10$. Am I right here?

Can't find your answer? Make a FREE account and ask your own questions, OR help others and earn volunteer hours!

Join our real-time social learning platform and learn together with your friends!
Latest Questions
Skyler14: we just got a new puppy
19 minutes ago 3 Replies 0 Medals
XxXGhostXxX: what is some good songs i should listen to?
17 minutes ago 13 Replies 1 Medal
penguin: what is your favorite music
17 hours ago 12 Replies 0 Medals
addison123456: why is Shakespeare so famous?
19 hours ago 49 Replies 3 Medals
Arriyanalol: what's the hottest city
1 day ago 44 Replies 0 Medals
75: Is my drawling good?|dw:1762535867309:dw|
1 day ago 2 Replies 0 Medals
Can't find your answer? Make a FREE account and ask your own questions, OR help others and earn volunteer hours!

Join our real-time social learning platform and learn together with your friends!