Anne is going to the grocery store to buy some fruit. She can buy either apples or oranges.Let a be the quantity of apples she buys, and let zo be the quantity of oranges she buys. Herutility function is:u(xa, xo) = ln xa + 3 ln xoAnne has y pounds to spend. The price of apples is pa and the price of oranges is po(a)(b)Write down Anne's budget constraint and utility maximization problem, and theLagrangian associated with this utility maximization problem.Find Anne's Marshallian demand functions for apples and oranges.Find Anne's indirect utility function.

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(a) (b) (c) Write down Anne's budget constraint and utility maximization problem, and the Lagrangian associated with this utility maximization problem. Find Anne's Marshallian demand functions for apples and oranges. Find Anne's indirect utility function.

(a) (b) (c) Write down Anne's budget constraint and utility maximization problem, and the Lagrangian associated with this utility maximization problem. Find Anne's Marshallian demand functions for apples and oranges. Find Anne's indirect utility function.

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Anne is going to the grocery store to buy some fruit. She can buy either apples or oranges.
Let a be the quantity of apples she buys, and let zo be the quantity of oranges she buys. Her
utility function is:
u(xa, xo) = ln xa + 3 ln xo
Anne has y pounds to spend. The price of apples is pa and the price of oranges is po
(a)
(b)
Write down Anne's budget constraint and utility maximization problem, and the
Lagrangian associated with this utility maximization problem.
Find Anne's Marshallian demand functions for apples and oranges.
Find Anne's indirect utility function.

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