# Ginger’s utility function is U(x, y) = x^2 y, with associated marginal utility functions MU_x = 2… 1 answer below »

Ginger’s utility function is U(x, y) = x^2 y, with associated marginal utility functions MU_x = 2xy and MU_y = x^2. She has income I = 240 and faces prices P_x = $8 and P_y = $2. Determine Ginger’s optimal basket given these prices and her income. If the price of y increases to $8 and Ginger’s income is unchanged, what must the price of x fall to in order for f 1 her to be exactly as well off as before the change in P_y ?

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Ginger’s utility function is U(x, y) = x^2 y, with associated marginal utility functions MU_x = 2…
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