1. Convex Preferences. Consumer Equilibrium and Market Demand. Let Px = $10, Py = $15, and M = $800. 1. Find the utility-maximizing consumption bundle for the following utility function: U=X1/4Y3/4. (Hint: use Lagrangian Method to determine X*, Y*, and U*). Circle your final answers.
1. Convex Preferences. Consumer Equilibrium and Market Demand. Let Px = $10, Py = $15, and M = $800. 1. Find the utility-maximizing consumption bundle for the following utility function: U=X1/4Y3/4. (Hint: use Lagrangian Method to determine X*, Y*, and U*). Circle your final answers.
Chapter6: Consumer Choice Theory
Section: Chapter Questions
Problem 13SQ
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1. Convex Preferences. Consumer Equilibrium and Market Demand.
Let Px = $10, Py = $15, and M = $800.
1. Find the utility-maximizing consumption bundle for the following utility function:
U=X¹/4Y3/4. (Hint: use Lagrangian Method to determine X*, Y*, and U*).
Circle your final answers.
2. Sketch the demand function for Commodity X in this case. Hint: Express Px as a
function of X and then put X on the horizontal axis and Px on the vertical axis.
1
L
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