An individual has the following utility function: U = Z!/2 H/2, where Z is acomposite good and H is the level of health.The individual has income, m = $100.The price of the composite good, Z, is Pz = 1.The price of health, H, is PH = 4.What is the optimal consumption bundle of H and Z that maximizes utility? Showyour steps and show the decision graphically (which includes finding the endpoints ofthe budget constraint).

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Answered: te good and H is the level of health.…

te good and H is the level of health. vidual has income, m $100. e of the composite good, Z, is Pz = 1. e of health, H, is PH = 4.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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