Kai spends his income on lime (L) and ginger water (G). Lime is priced at $2, while ginger water costs $1. Suppose Kai has $30 to spend and his utility function can be represented as U(L,G)= L0.5 G0.5 a. What is the optimal number of lime and ginger water for Kai to purchase? b. How much utility does this combination bring him?
Kai spends his income on lime (L) and ginger water (G). Lime is priced at $2, while ginger water costs $1. Suppose Kai has $30 to spend and his utility function can be represented as U(L,G)= L0.5 G0.5 a. What is the optimal number of lime and ginger water for Kai to purchase? b. How much utility does this combination bring him?
Economics (MindTap Course List)
13th Edition
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Roger A. Arnold
Chapter20: Consumer Choice: Maximizing Utility And Behavioral Economics
Section: Chapter Questions
Problem 3WNG
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Transcribed Image Text:Kai spends his income on lime (L) and ginger water (G). Lime is priced at $2, while ginger water
costs $1. Suppose Kai has $30 to spend and his utility function can be represented as
U(L,G) = L0.5 G0.5
What is the optimal number of lime and ginger water for Kai to purchase?
b. How much utility does this combination bring him?
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