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?

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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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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