For problems 1, 2, 3, we consider an agent Ann who consumes goods and y and has a utility U(x, y) = x²y. In these problems, Good x costs P₂ and good y costs Py. (1) Ann has I to spend. (a) Write out Ann's utility maximization problem. (b) Find: MU, MUy, and MRS zy- (e) Write out Ann's tangency condition. What is the other equation needed to solve for Ann's demand? (d) Find Ann's demands for x and y as functions of Pz, Py, and I. (Partial credit if you do this only for I = 30, P₂ = 5 and Py = 2.)
For problems 1, 2, 3, we consider an agent Ann who consumes goods and y and has a utility U(x, y) = x²y. In these problems, Good x costs P₂ and good y costs Py. (1) Ann has I to spend. (a) Write out Ann's utility maximization problem. (b) Find: MU, MUy, and MRS zy- (e) Write out Ann's tangency condition. What is the other equation needed to solve for Ann's demand? (d) Find Ann's demands for x and y as functions of Pz, Py, and I. (Partial credit if you do this only for I = 30, P₂ = 5 and Py = 2.)
Economics (MindTap Course List)
13th Edition
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Roger A. Arnold
Chapter20: Consumer Choice: Maximizing Utility And Behavioral Economics
Section: Chapter Questions
Problem 6QP
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