Question 5 A utility function is given by u(x₁.x2)=-4x+80x₁8x + 100x2-X1X2- Suppose that prices are p₁ = 5, and p2 = 1. Income is I. 1. Specify the Lagrangean using all three constraints. 2. Use the Lagrangean determine the range of values of income / for which the different constraints may bind. Note: these preferences are not monotone. As a consequence, the budget constraint itself may not bind.

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Form Utility

The term utility in general refers to the satisfaction earned from usage of a particular product or service. Utility always plays an important role because it influences various important elements like demand & thereby the price of the good or service as well. Though utility is not easy to measure, various types of economic models can be used indirectly. There can be various types of utilities like economic utility, marginal utility, cardinal utility, form utility.