Consider the following utility map:
A budget curve gives the set of possible consumption choices with a given income. If you have an income of $1106 and the price of good X is given by , and the price of good Y given by . The equation for the budget line is given by: .
A utility maximizing combination of goods X and Y occurs when the budget line is tangent to an indifference curve.
Find X as a function of its price and the price of good Y: (If Y represents all other goods, than this function is just a demand curve for X).
(Use px for and py for )
Let be the value for X when and .
(you will lose 25% of your points if you do)
You can earn partial credit on this problem.