Abby's Utility Function Is Given by U = X²Y²

question 89

Multiple Choice

Abby's utility function is given by U = X²Y². For this utility function, MU_x = 2XY² and MU_y = 2X²Y. If good X costs $10 and good Y costs $5, then Abby will consume ____ times as many units of good Y as she does units of good X.

• A) 2
• B) 3
• C) 4
• D) 1/2

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Definitions:

Budget Deficits

The situation where a government's expenditures surpass its revenues within a specific timeframe, often a fiscal year.

Depression

A prolonged and severe downturn in economic activity, characterized by high unemployment, low consumer spending, and a decrease in production.

Spending

The amount of money expended by individuals, businesses, or governments on goods and services.

Monetarists

An economic philosophy highlighting the importance of government intervention in regulating the money supply.