Suppose That Defne's MU_X = Y² and MU_Y = 2XY

question 5

Essay

Suppose that Defne's MU_X = Y² and MU_Y = 2XY. The price of good X is $10 and the price of good Y is $2. If Defne is consuming 8 units of good X and 16 units of good Y, is she maximizing utility? Explain your answer.

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Definitions:

Average Total Cost

The total cost of production divided by the quantity produced, including both fixed and variable costs, representing the per unit cost of production.

Output

Output is the total amount of goods or services produced by a company, industry, or economy within a certain period.

Total Cost

The complete cost of production that combines all costs, both fixed and variable, incurred to produce goods or services.

Change

The act or process of becoming different, which can apply to a wide variety of contexts, including physical alterations, shifts in ideas, or modifications in systems.