For the next two questions, consider a consumer with utility function U(x1, X2) = x1+X1X2+X2 who obeys the standard budget constraint P1X1 + P2X2 = Y. %3D Formulating the problem formally, the consumer solves: max X1 + X1X2+ X2 s.t. P1X1 + P2X2 = Y Solve for optimal x1 and X2. Select one: Y – P - P2 x2 Y + P – P2 а. 2P 2P2 Ob. Y – P + P2 x2 Y + P - P2 2P 2P2 Y – P + P2 Y – P – P2 2P2 С. 2P Y + P – P2 x2 = 2P2 Y + P1 – P2 2P1 Are goods x1 and x2 substitutes or complements? Select one: а. substitutes O b. both c. complements d. neither d.

For the next two questions, consider a consumer with utility function U(x1, X2) = x1+X1X2+X2 who obeys the standard budget constraint P1X1 + P2X2 = Y. %3D Formulating the problem formally, the consumer solves: max X1 + X1X2+ X2 s.t. P1X1 + P2X2 = Y Solve for optimal x1 and X2. Select one: Y – P - P2 x2 Y + P – P2 а. 2P 2P2 Ob. Y – P + P2 x2 Y + P - P2 2P 2P2 Y – P + P2 Y – P – P2 2P2 С. 2P Y + P – P2 x2 = 2P2 Y + P1 – P2 2P1 Are goods x1 and x2 substitutes or complements? Select one: а. substitutes O b. both c. complements d. neither d.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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