First household m=$2,500 per month, spends $125 dollars per month on electricity. Second household m=$10,000 per month and spends $200 per month on electricity. p1=0.1 and p2=1 x1=consumption of electricity and x2=everything else The preferences over electricity and other goods is described by a Cobb- Douglas utility function. What are the parameters of the utility function for each of the two households?
First household m=$2,500 per month, spends $125 dollars per month on electricity. Second household m=$10,000 per month and spends $200 per month on electricity. p1=0.1 and p2=1 x1=consumption of electricity and x2=everything else The preferences over electricity and other goods is described by a Cobb- Douglas utility function. What are the parameters of the utility function for each of the two households?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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First household m=$2,500 per month, spends $125 dollars per month on electricity.
Second household m=$10,000 per month and spends $200 per month on electricity.
p1=0.1 and p2=1
x1=consumption of electricity and x2=everything else
The preferences over electricity and other goods is described by a Cobb- Douglas utility function. What are the parameters of the utility function for each of the two households?
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