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 respective prices increase?

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 respective prices increase?

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter2: Mathematics For Microeconomics

Section: Chapter Questions

Problem 2.7P

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Don't use ai i will report you answer solve it as soon as possible with proper explanation

Definition Definition Structural system an enterprise uses to collect, store, report, retrieve, and process financial data. Accounting information systems are used by business analysts, auditors, accountants, and consultants for accurate and efficient access to financial data.

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