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Homework answers / question archive / I will NOT submit a tutor's work as my own
I will NOT submit a tutor's work as my own. I just want to get the concept straight.Assume that the price of F (PF) is 10 kronor per unit and the price of E (PE) 10 kronor per unit. So her budget constraint is 10E + 10F = 100 Assume that her utility function is given by U =√(E ∗ F) - see in question below!
QUESTION) Assume that her budget increases to 200 kronor/each week. Draw the new budget constraint. For this particular utility function (Cobb-Dogulas) demand for F is given by 0,5*I / Pf and equivalently for E. How much E and F will she consume at this higher income, and what is her utility level?