Suppose a Consumer Has M = $200 to Spend on Two

question 81

Multiple Choice

Suppose a consumer has M = $200 to spend on two goods, X and Y.If the per-unit prices of X and Y are respectively given by P_X = $2 and P_Y = $4, then to maximize utility subject to a budget constraint can be solved by form which of the following Lagrangian?

• A)? = U(X,Y) + \(\lambda\)(200 - 2X - 4Y).
• B)? = U(X,Y) + \(\lambda\)(200 - 2P_X - 4P_Y).
• C)? = (200 - 2X - 4Y) + \(\lambda\)U(X,Y).
• D)? = U(X,Y) + \(\lambda\)(2X - 4Y + 200).

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Definitions:

Threat

A potential cause of harm or adverse effect on someone or something.

Real Power

The actual ability or capacity to influence outcomes, decisions, or actions, often beyond mere formal authority.

Unilateral Relationships

Relations where actions or decisions are undertaken by one party without the agreement, consent, or participation of others.

Transactional Relationships

Interactions between parties that are based on exchanges or transactions, often characterized by a focus on short-term benefits or reciprocal arrangements.