Answered: Chao's utility function is ♦ = 4��1/2 +… | bartleby

Microeconomic Theory

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter4: Utility Maximization And Choice

Section: Chapter Questions

Problem 4.13P

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Question

Do not use Ai. Answer in all options.

Chao's utility function is ♦ = 4��1/2 + ��2.
She faces prices ��1 and ��2 and income
(a) Write the Lagrangian for Chao's utility maximization
problem.
(b) Use the Lagrangian to solve for the optimal
quantities of �1 and ��2 in terms of income and
prices.
(c) How much income must Chao have to consume
both goods?

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