Hans Has $27 Which He Decides to Spend on X

question 60

Multiple Choice

Hans has $27 which he decides to spend on x and y. Commodity x costs $16 per unit and commodity y costs $10 per unit. He has the utility function U(x, y) = 5x² + 2y² and he can purchase fractional units of x and y. Hans will choose

• A) only x.
• B) only y.
• C) some of each commodity but more y than x.
• D) some of each commodity but more x than y.
• E) equal amounts of the two commodities.

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