Hello, I need some assistance with the attached question. It concerns constrained consumer optimisation. Question 1*Use the utility function u(x1, x2) = logx1+ logx2 and the budget constraint p.x1 + p>x2= 1.a) Find the demand functions. Also solve for the optimal Lagrangian multiplier, A'.

A rational consumer will be in equilibrium when his utility is maximized within a given budget line…

Answered: Question 1* Use the utility function…

Question 1* Use the utility function u(x1, x2) = logx:+ logx2 and the budget constraint p>x: + p>x2= I. a) Find the demand functions. Also solve for the optimal Lagrangian multiplier, A".

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Hello, I need some assistance with the attached question. It concerns constrained consumer optimisation.

Question 1*
Use the utility function u(x1, x2) = logx1+ logx2 and the budget constraint p.x1 + p>x2= 1.
a) Find the demand functions. Also solve for the optimal Lagrangian multiplier, A'.

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