Esaie G.

concave preference

The utility function of a consumer is as follows: U (x; y) = (1 + x) y The prices of goods are P for good X and Q for Y, R the consumer's income

a.Calculate the optimum quantities that maximize consumer satisfaction. Is this a maximum or a minimum, P1 = 20, P2 = 8, R = 4

b. Does this utility function admit a wedge equilibrium?