If Utility function is of form U = 12x1 + 10x2 + log(x2), with prices of goods of the form p1= 5 and p2= 10. If monetary Income is 500, we ask: (a) Determine optimal quantities for x1 and x2 and establish utility obtained by consumer. b) If Monetary Income falls to 450, then how do you change quantities of x1 and x2 that maximizes consumer's utility?
If Utility function is of form U = 12x1 + 10x2 + log(x2), with prices of goods of the form p1= 5 and p2= 10. If monetary Income is 500, we ask:
(a) Determine optimal quantities for x1 and x2 and establish utility obtained by consumer.
b) If Monetary Income falls to 450, then how do you change quantities of x1 and x2 that maximizes consumer's utility?
Utility function actually indicates the consumer preferences which lead to the consumer's purchase of goods and services. So utility functions are the most important part of this problem. So we have to calculate it very carefully.
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Why is base 10 logarithm (log) derived as a natural logarithm (1/x2)? Please confirm that derivate of logarithm of base 10 is in this case 1/[x2*log(10)] to modify your answer. Thank you
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