Diogo has a utility​ function, ​U(q 1​, q 2​)equalsq 1 Superscript 0.8 Baseline q 2 Superscript 0.2​, where q 1 is chocolate candy and q 2 is slices of pie. If the price of slices of​ pie, p 2​, is ​$4.00​, the price of chocolate​ candy, p 1​, is ​$8.00​, and​ income, Y, is ​$100​, what is​ Diogo's optimal​ bundle? The optimal valueLOADING... of good q 1 is

Respuesta :

Answer:

The value of "[tex]\bold{q_1=2.5}[/tex]".

Explanation:

Given value:

[tex]U= Max \ q_1^{0.8} \ q_2^{0.2}\\\\[/tex]

Differentiate the above equation with respect of [tex]q_1[/tex], which will give [tex]MUq_1[/tex] as follows:

[tex]MUq_1= q_2^{0.2}(\frac{0.2}{q_1^{0.8}})\\\\[/tex]

[tex]=0.2(\frac{ q_2^{0.2}}{q_1^{0.8}})[/tex]

Differentiate the equation with respect of [tex]q_2[/tex], which will give [tex]MUq_2[/tex] as follows:

[tex]MUq_2= q_1^{0.8}(\frac{0.8}{q_1^{0.8}})\\\\[/tex]

[tex]=0.8(\frac{ q_1^{0.8}}{q_2^{0.2}})}{}[/tex]

for balancing the equation

[tex]\frac{MUq_1}{P_1}=\frac{MUq_2}{P_2}\\\\\frac{MUq_1}{MUq_2}=\frac{P_1}{P_2}\\\\[/tex]

[tex]\frac{0.2(\frac{ q_2^{0.2}}{q_1^{0.8}})} {0.8(\frac{ q_1^{0.8}}{q_2^{0.2}})}}= \frac{8}{4}\\\\\frac{(\frac{ q_2^{0.2}}{q_1^{0.8}})} {4(\frac{ q_1^{0.8}}{q_2^{0.2}})}}= \frac{2}{1}\\\\\frac{(\frac{ q_2^{0.2}}{q_1^{0.8}})} {(\frac{ q_1^{0.8}}{q_2^{0.2}})}}= 8\\\\\frac{q_2}{q_1}=8\\\\q_2=8q_1\\\\[/tex]

Calculate the value of [tex]q_1[/tex] and [tex]q_2[/tex]  as follows:

[tex]100 =p_1q_1+P_2q_2\\\\100= 8q_1+4(8q_1)\\\\100=8q_1+32q_1\\\\100=40q_1\\\\q_1=\frac{100}{40}\\\\q_1=2.5[/tex]

[tex]q_2=8q_1\\\\\therefore q_1=2.5\\\\q_2=8\times 2.5\\\\q_2=20.0\\\\q_2=20[/tex]