A consumer has a budget of ₦1000 to spend on two goods, A and B. The prices of goods A and B are ₦200 and ₦300, respectively. The consumer's indifference curves are given by the following equation:

U = 2A + 3B

Using the concept of consumer behavior, derive the consumer's optimal consumption bundle.

Question

A consumer has a budget of ₦1000 to spend on two goods, A and B. The prices of goods A and B are ₦200 and ₦300, respectively. The consumer's indifference curves are given by the following equation:

U = 2A + 3B

Using the concept of consumer behavior, derive the consumer's optimal consumption bundle.

Accepted Answer

The consumer should consume 2 units of good A and 1 unit of good B.

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