Max Has the Utility Function U(x, Y)= X(y + 1)

question 49

Essay

Max has the utility function U(x, y)= x(y + 1).The price of x is $2 and the price of y is $1.Income is $10.How much x does Max demand? How much y? If his income doubles and prices stay unchanged, will Max's demand for both goods double?

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Definitions:

Direct Manufacturing Cost

Expenses that are directly attributable to the production of goods, including direct labor and materials costs.

Differential Costs

The difference in total costs between two alternatives, helping in decision-making processes where alternatives are being considered.

Sunk Costs

Costs that have already been incurred and cannot be recovered or altered by future actions.

Sunk Cost

Refers to money that has already been spent and cannot be recovered, which should not influence future business decisions.