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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