Chiara has the utility function U(x1,x2) = x1(x2+5). The price of x1 is 5$ and the price of x2 is 2$. Income is 25$. A)How much of each good does Chiara demand? (without lagrangian) B)If Chiara’s income doubles, but prices remain unchanged, will Chiara’s demand double? C)How does ordinary demand change when income doubles (50$) and the price of x2 also double?
Chiara has the utility function U(x1,x2) = x1(x2+5). The price of x1 is 5$ and the price of x2 is 2$. Income is 25$. A)How much of each good does Chiara demand? (without lagrangian) B)If Chiara’s income doubles, but prices remain unchanged, will Chiara’s demand double? C)How does ordinary demand change when income doubles (50$) and the price of x2 also double?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Chiara has the utility function U(x1,x2) = x1(x2+5). The price of x1 is 5$ and the price of x2 is 2$. Income is 25$.
A)How much of each good does Chiara demand? (without lagrangian)
B)If Chiara’s income doubles, but prices remain unchanged, will Chiara’s demand double?
C)How does ordinary demand change when income doubles (50$) and the price of x2 also double?
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