1. For each of the following three utility functions below, find the demand functionby explicitly solving each utility maximization problem.(a) u(x1,x2) = xx.(b) u(x1, x2) = Inx1+2lnx2.(c) u(x1,x2) = x7x3.

Given Utility Function a) U(x1, x2) = x11/3x22/3 b) U(x1, x2) = lnx1 + 2lnx2 c) U(x1, x2) = x21 +…

Answered: 1. For each of the following three…

Micro Economics For Today

10th Edition

ISBN:9781337613064

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter6: Consumer Choice Theory

Section: Chapter Questions

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6. Suppose that a fast-food junkie derives utility from three goods - softdrinks (x), 0.5 hamburgers (y), and ice cream sundaes (z) – according to the Cobb-Douglas utility function U(x, y, z)=x5y5 (1+z)05. Suppose also that the prices for these goods are given by p=0.25, p, = 1, and p. = 2 and that this consumer's income is equal to 2. a) How much will this consumer buy of each good to maximize utility? b) Show that the utility function is maximized (Use |H₂| to identify whether it is a maximum or a minimum). c) What is the maximum utility of the fast-food junkie?
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1. For each of the following three utility funetions below, find the demand function by explicitly solving each utility maximization problem. (a) u(x1, x2) = xx. (b) u(x1,x2) = Inx1 +2ln.x2. (e) u(x1,x2) = x7x3.