1.Alice likes to consume (N + 2) dumplings with each egg she eats. Writethe utility function that represents Alice's preferences over dumplings and eggs. Findher demand of dumplings and eggs as a function of her income and the prices of thetwo goods.2.Bob's preferences are represented by the utility function ug(dB, eB)(N + 1) In(dB) + (eg)². Use the Lagrange method to find Bob's demand of dumplingsand eggs as a function of his income and the prices of the two goods [Note: Try firstto find the demand for eggs and take the positive root of the equation you will obtain].What would be Bob's demand for dumplings and eggs if the price of dumplings isPp = 0.1, the price of eggs is PE = 2 and his budget is mB = 9? This problem set tells the story of four friends Alice, Bob, C'arol, who are consumers, andFanny, who owns a firm. Alice, Bob and Carol have preferences over two goods, Dumplingsand Eggs. Fanny's firm produces eggs. In what follows you should use m; for i = A, B, C todenote the income of each of the three consumers and p; for j = D, E to denote the pricesof each of the two goods. Similarly, d; and e; denote the consumption of dumplings and eggsrespectively by consumer i = A, B, C. Fanny uses two (non-fixed) inputs, called 1 and 2, toproduce eggs; the price of these inputs is denoted by w; for j = 1,2.

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1. Alice likes to consume (N + 2) dumplings with each egg she eats. Write the utility function that represents Alice's preferences over dumplings and eggs. Find her demand of dumplings and eggs as a function of her income and the prices of the two goods.

1. Alice likes to consume (N + 2) dumplings with each egg she eats. Write the utility function that represents Alice's preferences over dumplings and eggs. Find her demand of dumplings and eggs as a function of her income and the prices of the two goods.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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