Given f(x,y) = 2x2 - 6xy + 9y2, and Px= 7, Py= 5 and income, I = 175. Construct the budget contraint and Lagrange function and solve for the equilibrium values of x and y. (a) What is the equilibrium value of x? (Give your answer to two decimal places, if required) (b) What is the equilibrium value of y? (Give your answer to two decimal places, if required) (c) What is the value of the determinant of the bordered Hessian matrix? (Give your answer to two decimal places, if required) unanswered d. Based on the value of the Bordered Hessian, comment whether the objective function is maximized or minimized.
Given f(x,y) = 2x2 - 6xy + 9y2, and Px= 7, Py= 5 and income, I = 175. Construct the budget contraint and Lagrange function and solve for the equilibrium values of x and y. (a) What is the equilibrium value of x? (Give your answer to two decimal places, if required) (b) What is the equilibrium value of y? (Give your answer to two decimal places, if required) (c) What is the value of the determinant of the bordered Hessian matrix? (Give your answer to two decimal places, if required) unanswered d. Based on the value of the Bordered Hessian, comment whether the objective function is maximized or minimized.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Given f(x,y) = 2x2 - 6xy + 9y2,
and Px= 7, Py= 5 and income, I = 175.
Construct the budget contraint and Lagrange function and solve for the equilibrium values of x and y.
(a) What is the equilibrium value of x?
(Give your answer to two decimal places, if required)
(b) What is the equilibrium value of y?
(Give your answer to two decimal places, if required)
(c) What is the value of the determinant of the bordered Hessian matrix?
(Give your answer to two decimal places, if required)
unansweredd. Based on the value of the Bordered Hessian, comment whether the objective function is maximized or minimized.
Answer in one word.
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