2. Suppose Fred has a utility function of the form U = X ½ Y ½ . Fred has an income of $100, good X costs $1.00, and good Y costs $2.00. How much of good X and how much or good Y will Fred buy?

Question

2.	Suppose Fred has a utility function of the form U = X ½ Y ½ .  Fred has an income of $100, good X costs $1.00, and good Y costs $2.00.  How much of good X and how much or good Y will Fred buy?

Ive already drawn my graph. i know that fred could buy 100 of x only and 50 of y only under his budget constraint. i know the slop is -2 but i cannot figure out how to calculate for good X and Y
thanks

Ms. Sue · Answer

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