Question
Suppose after paying bills and setting aside some money
for retirement, Joana has $130 left to spend on just two goods: concerts and books. For simplicity, we’ll assume concert tickets cost $55 and books cost $10. Which of the following combination of goods could be her utility-maximizing bundle?Solution
To maximise the utility Joana must buy 2 concert ticket and 2 books. (2*55 + 2* 10 = 130). Option 1 and 5 is unattainable for Joana and other options are not as efficient as option B is.
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