Phil’s utility function is U=X1/3Y2/3, where MU?? = 3X2/3 and MU?? = 3Y1/3 . In Los Angeles,… 1 answer below »

Phil’s utility function is U=X1/3Y2/3, where MU?? = 3X2/3 and MU?? = 3Y1/3 . In Los Angeles, Phil’s net income would equal $4500, and prices of good X and good Y are $5 and $8, respectively. In Washington, D.C., Phil’s net income would equal $6000, and the prices of good X and good Y are $8 and $10, respectively. a)Where should Phil live if his goal is to maximize his utility? Show your calculations b) What is the minimum income Phil would need in London where prices for X and Y are $10 and $12 respectively to achieve the same utility as he would in D.C.?

 

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