thought that a consumer measures the utility, u(x, y), of possessing a quantity, z, of apples and a quantity, y, of oranges by the formula u(x, y) = rºyl-a, where a is a constant. Suppose that apples cost p dollars each and oranges q dollars each. If the consumer has M dollars to spend on apples and oranges, use the method of Lagrange multipliers to find the quantity of each that he will buy in terms of a, p, q and M. [You are not required to justify the use of the method of Lagrange multipliers here.] For equally priced apples and oranges when he has one dollar to spend, he is actually observed buying one apple and two oranges. What value of a does this imply?
thought that a consumer measures the utility, u(x, y), of possessing a quantity, z, of apples and a quantity, y, of oranges by the formula u(x, y) = rºyl-a, where a is a constant. Suppose that apples cost p dollars each and oranges q dollars each. If the consumer has M dollars to spend on apples and oranges, use the method of Lagrange multipliers to find the quantity of each that he will buy in terms of a, p, q and M. [You are not required to justify the use of the method of Lagrange multipliers here.] For equally priced apples and oranges when he has one dollar to spend, he is actually observed buying one apple and two oranges. What value of a does this imply?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
![(b) It is thought that a consumer measures the utility, u(x, y), of possessing a quantity, z,
of apples and a quantity, y, of oranges by the formula
u(x, y) = rªyla,
where a is a constant.
Suppose that apples cost p dollars each and oranges q dollars each. If the consumer
has M dollars to spend on apples and oranges, use the method of Lagrange multipliers
to find the quantity of each that he will buy in terms of a, p, q and M.
[You are not required to justify the use of the method of Lagrange multipliers here.]
For equally priced apples and oranges when he has one dollar to spend, he is actually
observed buying one apple and two oranges. What value of a does this imply?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ff8945807-7b20-4907-aaaa-f1ae9458f443%2Fb5419edd-cc49-4583-8dd8-691e78fa9721%2Fguvs1ku_processed.jpeg&w=3840&q=75)
Transcribed Image Text:(b) It is thought that a consumer measures the utility, u(x, y), of possessing a quantity, z,
of apples and a quantity, y, of oranges by the formula
u(x, y) = rªyla,
where a is a constant.
Suppose that apples cost p dollars each and oranges q dollars each. If the consumer
has M dollars to spend on apples and oranges, use the method of Lagrange multipliers
to find the quantity of each that he will buy in terms of a, p, q and M.
[You are not required to justify the use of the method of Lagrange multipliers here.]
For equally priced apples and oranges when he has one dollar to spend, he is actually
observed buying one apple and two oranges. What value of a does this imply?
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