Given U(x, y) = min(x, 4y), solve for the utility-maximizing combination of x and y. (Given that budget constraint: P_x + P_y = I)
Suppose Adam’s preferences toward two goods x and y can be represented by a Cobb-Douglas utility function: U(x, y) = x^α y^β, where α + β = 1. Also given that the price of good x is P_x, the price of good y is P_y, and Adam’s disposable income is I.
Solve for the amount of x and y that can give Adam the most utility.