Don't use ai i will report you answer solve it as soon as possible with proper explanation Suppose you have the utility function of u(x1, x2) = x1x2 and a budget constraint of p1x1 + p2x2 m. Use this information to answer the following questions:(a) What is the Lagrangian for this constrained optimization problem?(b) In the last homework you found that the optimal amount of x*1 was m/2p1 and the optimal amount of x* 2 was m/2p2. How would you find this using the Lagrangian method? Show your work.(c) What do you notice about these two demand functions as their respectiveprices increase?

Part (c): Analysis of Demand Functions with Respect to PricesThe demand functions are:As the…

Answered: Suppose you have the utility function…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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For the following utility function find the MRS at (x, y) = (2, 3) a) U(x, y) =2x +y b) U(x, y) =x^3 y^2 c) U(x, y) =min(x, 2y) Solve subparts (c )correctly
why is there no inclusion of the parameter z in the solutions and the budget constraint?
A consumer has the following utility function: U (x, y) = (x + a) (y + b) Prices of the two goods x and y respectively are px and py and the consumer has income m. We assume that all prices and income are strictly positive. Furthermore, throughout this question we assume that m is high enough so that both x and y are strictly positive in equilibrium. (a) Solve the consumer’s optimization problem and express the demand for the two goods in terms of prices and income. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
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A utility function is given by the equation U = 20xe¬0.1x, where x is the number of glasses of wine consumed. (a) Show that this utility function has a maximum value and calculate the maximum utility. (b) Describe how marginal utility changes for glasses of wine consumed after the maximum utility is reached. Do you consider this reasonable? Give an explanation.
A consumer has the following utility function U (X1, X2) = (x1 + 3) (x2+4) Prices of the two goods X₁ and x₂ respectively are p₁ and p2 and the consumer has income m. We assume that all prices and income are strictly positive. Furthermore, throughout this question we assume that m is high enough so that both goods are consumed in strictly positive amount in equilibrium. (a) Solve the consumer's optimization problem and express the demand for the two goods in terms of prices and income. (1) Compute the missing values of elasticities in the following table assuming M = 10, p₁ = 2, and p2 = 1. Show your work. Income elasticity Absolute value of own price elasticity Cross price elasticity X₁ T≤ X₂ (b) While x2 is produced locally, x₁ is transported from a different region. Assume P₂ = 1. Building a new railroad (that connects the regions) will reduce transportation cost which in turn will reduce the price of good 1 from p₁ = 2 to p₁ = 1. Railroad will be funded by taxes which will reduce…
A consumer has set a budget of $600 for the consumption of good X and Y. The price of Good X is $20, and the price of good Y is $10. The consumer has a Utility function given by UCX. Y) = x0.60, 0.40 a) Find the optimal solution using a method that does not involves equations and illustrate the.
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Suppose Ed's utility from the consumption of martinis (m) is proportional to the number he drinks: U(m) = m. Further, Ed is particular about his martinis: He enjoys them in exactly three parts of gin (g) to one part vermouth (v). So we can write the utility as: U(m) = U (g, v) = min (g, 3v). (a) Provide a sketch of Ed's indifference curve in the (g, v)-space for various level of utility. (a) Let the prices be p, and p, and Ed's income be I. Find the demand functions for 9 and v [Hint: Use the proportional rule and budget constraint. No need for differential calculus] (b) Using the results in (b), what is Ed's indirect utility function? (c) Find the expenditure function; given a level of utility U, and prices pg and Pv.
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