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How do I derive quantity consumption?
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12/5/2014 8:41:29 PM
Posted: 1 year ago
Can the economists out there kindly explain how to get the answer. Thanks
In a hypothetical economy, consumers consume two goods - Good 1 and Good 2. Assume that the utility function of a consumer is given by U=Q1Q2 (Qi referring to amount of consumption of the good), Income (Y) of the consumer=100; prices of the goods P1=2 and P2=5. Derive the quantity of consumption of each good by the consumer at equilibrium.