ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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Anne is going to the grocery store to buy some fruit. She can buy either apples or oranges.
Let a be the quantity of apples she buys, and let zo be the quantity of oranges she buys. Her
utility function is:
u(xa, xo) = ln xa + 3 ln xo
Anne has y pounds to spend. The price of apples is pa and the price of oranges is po
(a)
(b)
Write down Anne's budget constraint and utility maximization problem, and the
Lagrangian associated with this utility maximization problem.
Find Anne's Marshallian demand functions for apples and oranges.
Find Anne's indirect utility function.
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Transcribed Image Text:Anne is going to the grocery store to buy some fruit. She can buy either apples or oranges. Let a be the quantity of apples she buys, and let zo be the quantity of oranges she buys. Her utility function is: u(xa, xo) = ln xa + 3 ln xo Anne has y pounds to spend. The price of apples is pa and the price of oranges is po (a) (b) Write down Anne's budget constraint and utility maximization problem, and the Lagrangian associated with this utility maximization problem. Find Anne's Marshallian demand functions for apples and oranges. Find Anne's indirect utility function.
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