Meghan S Utility Function Is Given Byu X Y X Yshe Has Income I 240 And Faces Prices 3305404

Meghan’s utility function is given byU( x, y) = x yShe has income I =240 and faces prices Px = $ 4and Py = $ 4 Find Meghan’s optimal basket given these prices and her income. If the price of x decreases to $ 2 and Meghan’s income is unchanged, what must the price of y rise to in order for her to be exactly as well off as before the change in Px? (Hint: You need to calculate p y such that, with the new prices, Meghan reaches exactly the same indifference curve as before).

Prof. Angela

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