Microeconomics: Suppose an individual's preferences are described by the utility function U = X0.5Y0.5

Question

 

 

and consider the following three combinations (or bundles) of X and Y:Bundle A (5,5); Bundle B (3,7); Bundle C (4,6).Given the individual's preferences, the bundles ranked from most-preferred to least preferred are:

 

A.Bundle A, Bundle B, Bundle C

 

B.Bundle A, Bundle C, Bundle B

 

C.Bundle B, Bundle A, Bundle C

 

D.Bundle B, Bundle C, Bundle A

 

E.Bundle C, Bundle A, Bundle B

 

F.Bundle C, Bundle B, Bundle A

 

G.None of the above. All of the bundles contain 10 total units of the two goods, and therefore the individual is indifferent between the bundles

Answer 1

U(5,5) = √(5*5) = √25

U(3,7) = √(3*7) = √21

U(4,6) = √(4*6) = √24

 

so choice B