Suppose That Lloyd Cares Only About Shoes and Clothes

question 43

Multiple Choice

Suppose that Lloyd cares only about shoes and clothes. Lloyd's utility function is U = S^0.5C^0.5, where S is the number of pairs of shoes and C is the number of clothing items that Lloyd owns. The price of shoes is $80, and the price of clothes is $100. Lloyd has a budget of $3200. Which levels of S and C maximize Lloyd's utility?

• A) S = 40 and C = 0
• B) S = 16 and C = 20
• C) S = 20 and C = 16
• D) S = 10 and C = 24

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