Suppose That Ken Cares Only About Bathing Suits (B) and Flip-Flops

question 61

Essay

Suppose that Ken cares only about bathing suits (B) and flip-flops (F). His utility function is U = B^0.8F^0.2. The price of bathing suits is $30, and the price of flip-flops is $2. Ken has a budget of $150.
a. What Lagrangian equation can be used to solve Ken's utility maximization problem?
b. Derive the first-order conditions for the maximization problem.
c. What is the solution to Ken's maximization problem?

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