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February 18th, 2013, 12:04 AM  #1 
Senior Member Joined: Sep 2012 Posts: 112 Thanks: 0  constraint problem
Q. Given the utility function U=QQ' & p=1, p'=4, B=120, where p and p' represents the prices of Q& Q' respectively & B represents the budget of the consumer. Find the maximum level of utility that the consumer can derive. Estimate the effect of one unit increase in the budget on the level of utility. I could find the answer of the 1st question(max. utility=900 , Q=60 , Q'= 15). But I cant solve the 2nd question. Please help... 

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