Sharon is a utility maximizer who consumes only X and Y. Her income (I) stays the...
Sharon is a utility maximizer who consumes only X and Y. Her income (I) stays the same over the months of September and October. You are given the following information about her choices:
| Px | PY | X | Y | |
| Sep. 2016 | 20 | 10 | 10 | 30 |
| Oct. 2016 | 10 | 10 | ? |
? |
Sharon’s preferences are Cobb-Douglas. How much Y does she consume in October?
10
20
30
Not enough information to tell.
Homework Answers
Correct Answer:
C
Consumption of Y, will remain same, because of price of Y has not yet changed. But, consumption of X will increase as price of X has decreases.
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