# determine the amounts of food and clothing within the restricted budget that maximize the consumer s utility

Assume that the prices of goods X and Y are fixed at \$ 15 and \$ 10 respectively and that the representative consumer has a monthly fixed income of \$ 5000. Based on this information, determine the amounts of food and clothing within his restricted budget that maximize the consumer’s utility

U (x,y) = 20. x3. y5

(M) = \$ 5000

Px = \$ 15

Py = \$ 10

so:

MaxU (x,y) = U(x,y)

MaxU (x,y) = 20. x3. y5

Y= M – Px . x

Py

Y = 5000 – 15 x

10

Y= 500 – 1,5 x

MaxU (x,y) = U(x,y)

MaxU (x,y) = 20x3 . (500 – 1,5x)5

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