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    • Thread Starter

    Been Struggling with this problem in my revision for my year 2 exams.

    Jane purchases 2 goods, X and Y, her Utility function is U = 4Y^0.25*X^0.5

    Jane has an income of £1200, the price of X is £10 and Y £40

    What is Janes optimal consumption of X and Y? What is the value of her total utility?

    So Far I have done this:

    Py*y + Px*x = M
    Py*y = M - Px*x
    y = (M/Py) - (Px/Py)*x Budget Constraint Equation

    y = (1200/40) - (10/40)*x
    y = 30 - (1/4)*x

    For Equilibrium

    -(Px/Py) = - (MUx/MUy)

    Could someone please take me through the steps of calculating the MUx and MUy.
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