Utility Maximization

Understand the process of maximizing utility given budget constraints.

Budget Constraint

120 = 4.00X + 6.00Y

Select Income:

I

120

Slide right to increase income. Slide left to decrease income.

Price of Good X:

P_x

Slide right to increase the price of X. Slide left to decrease the price of X.

Price of Good Y:

P_y

Slide right to increase the price of Y. Slide left to decrease the price of Y.

U(X,Y) = X^{0.5} Y^{0.5}

Preference for X:

\alpha

0.5

Preference for Y:

\beta = 1 - \alpha

0.5

Budget Constraint (BC) Utility Function (U)