Amy loves fancy and fashionable outfits. She never wears an outfit twice. She has a utility…

Amy loves fancy and fashionable outfits. She never wears an outfit twice. She has a utility
function takes the form U(x, y) = x
1/2
y
1/2 =
vxy, where x stands for the number of “new
outfits” and y is the amount of “Other goods” essential to her living. That is to say, Amy’s
marginal utilities for new outfit and other goods are:
MUx =
1
2
r
y
x
;
MUy =
1
2
rx
y
,
respectively.
Amy recently noticed that one of her favourite brand “Supreme” is offering a deal on
its’ latest patchwork hooded jackets, which is sold at $100 a piece. The promotion claims
that one can “get the second piece 50% off.” It means, if Amy buys a jacket from Supreme
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MAE201: Competition and Industry
Trimes