Suppose Anna’s utility for goods x1 and x2 is represented by the following utility function: U (x1, x2) = x11/2 x21/2 (a) Find Anna’s marginal rate of substitution, MRS12. (b) If the price for good x1 is p1 = 1, the price for good x2 is p2 = 2 and Anna’s available income is m = 12, write down Anna’s budget constraint. (c) For the utility, prices and income given above, find Anna’s optimal consumption choice (Marshallian demand) and her utility level.
Suppose Anna’s utility for goods x1 and x2 is represented by the following utility function: U (x1, x2) = x11/2 x21/2 (a) Find Anna’s marginal rate of substitution, MRS12. (b) If the price for good x1 is p1 = 1, the price for good x2 is p2 = 2 and Anna’s available income is m = 12, write down Anna’s budget constraint. (c) For the utility, prices and income given above, find Anna’s optimal consumption choice (Marshallian demand) and her utility level.
Micro Economics For Today
10th Edition
ISBN:9781337613064
Author:Tucker, Irvin B.
Publisher:Tucker, Irvin B.
Chapter6: Consumer Choice Theory
Section6.A: Indifference Curve Analysis
Problem 1SQP
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Suppose Anna’s utility for goods x1 and x2 is represented by the following utility function: U (x1, x2) = x11/2 x21/2
(a) Find Anna’s marginal rate of substitution, MRS12.
(b) If the price for good x1 is p1 = 1, the price for good x2 is p2 = 2 and Anna’s available income is m = 12, write down Anna’s budget constraint.
(c) For the utility, prices and income given above, find Anna’s optimal consumption choice (Marshallian demand) and her utility level.
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