Ann consumes two goods X and Y, his utility function is U(X, Y ) = 2XY 2. Suppose the price of X is $10, while the price of Y is $15. Ann's income is $500.
(a) Write the expression for indifference curve when Ann gets utility level 40. And along the indifference curve you found, calculate out the numbers of consumption of X when Y=4.
(b) Write the expression for Ann's budget constraint, graph the budget constraint and determine its slope.
(c) Determine the X, Y combination which maximizes Ann's utility, given her budget constraint. And figure out what's marginal rate of substitution (MRS) between two goods at that maximization point.