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    Solving for Utility-Maximizing Bundle of Perfect Substitutes

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    Jennifer's utility function is given by U = x + y, where x = food and y = clothing. If her income = $100, price of x = $10 and price of y= $5, find (graphically) her utility maximizing bundle of x and y. If her utility changes to U = 3x + y, how will her utility-maximizing bundle be affected?

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    Solution Summary

    This solution provides detailed explanation of how to solve for utility-maximizing bundle of goods that are perfect substitutes (linear utility function). The solution uses two versions of utility function and examines how the optimal solution changes from one case to the other.