Darius's Utility Function Is U = 6XY, Where the MU_X

question 69

Essay

Darius's utility function is U = 6XY, where the MU_X = 6Y and MU_Y = 6X. The prices of good X and good Y are $12 and $15, respectively. Suppose that Darius's indifference curve is tangent to his budget constraint, where he is consuming 20 units of good X. How many units of good Y must Darius be consuming?

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Definitions:

Consumer Demand

The desire and willingness of consumers to purchase goods or services at a given price, influencing market dynamics and pricing strategies.

Consumer Surplus

The gap between the total amount consumers are prepared and able to spend for a product or service versus what they genuinely spend.

Maximum Price

The highest price that can legally be charged for a good or service, often set by government regulations to protect consumers from excessively high prices.

Market Failure

A situation in which the allocation of goods and services is not efficient, often leading to a net social welfare loss.