A consumer’s utility function is given by U = 2x1x2 + 3x₁ where x₁ and x₁ denote the number of items of two goods G1 and G2. The prices of the goods are $1 and $2 respectively. Use Lagrange multipliers to find the maximum value of U if the consumer's income is $83. Estimate the new optimal utility in income rises by $1.

A consumer’s utility function is given by U = 2x1x2 + 3x₁ where x₁ and x₁ denote the number of items of two goods G1 and G2. The prices of the goods are $1 and $2 respectively. Use Lagrange multipliers to find the maximum value of U if the consumer's income is $83. Estimate the new optimal utility in income rises by $1.

Microeconomics A Contemporary Intro

10th Edition

ISBN:9781285635101

Author:MCEACHERN

Publisher:MCEACHERN

Chapter6: Consumer Choice And Demand

Section: Chapter Questions

Problem 13PAE

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