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

question 105

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 utility maximization subject to a budget constraint can be found from which of the following Lagrangians?

• A) ℒ = U(X,Y) +  (200 − 2X − 4Y)
• B) ℒ = U(X,Y) +  (200 − 2P_X − 4P_Y)
• C) ℒ = (200 − 2X − 4Y) +  U(X,Y)
• D) ℒ = U(X,Y) +  (2X − 4Y + 200)

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