Question

For the utility function u(x, y) = xy and given budget constraint M = p_xx+p_yy. what is the optimum bundle of consumption of x and y?

• A. \((\frac{M}{P_x},\frac{M}{P_y})\)
• B. \((\frac{M}{2P_x},\frac{M}{2P_y})\)
• C. \((\frac{M}{P_y},\frac{M}{P_x})\)
• D. \((\frac{M}{P_y},\frac{M}{P_x})\)

Answer 1

The Correct Option is B

The correct answer is (B) : \((\frac{M}{2P_x},\frac{M}{2P_y})\)