This is macroeconomics theory Questions 4 (Choice & Demand). Suppose a consumer's utility function is given by:U(X1, X2) = x₁4xa) What is the consumer's demand for x, as a function of income and prices? What is the consumer'sdemand for x₂ as a function of income and prices? Use Lagrange method or your intuition.b) What percentage of income does the consumer spend on x₁? What percentage of income does theconsumer spend on x₂?Page 3

The consumer maximizes the utility subject to the budget constraint. Demand function represents…

Questions 4 (Choice & Demand). Suppose a consumer's utility function is given by: U(x₁, x₂) = x₁4x 06 a) What is the consumer's demand for x, as a function of income and prices? What is the consumer's demand for x, as a function of income and prices? Use Lagrange method or your intuition. b) What percentage of income does the consumer spend on x₁? What percentage of income does the consumer spend on x₂?

Questions 4 (Choice & Demand). Suppose a consumer's utility function is given by: U(x₁, x₂) = x₁4x 06 a) What is the consumer's demand for x, as a function of income and prices? What is the consumer's demand for x, as a function of income and prices? Use Lagrange method or your intuition. b) What percentage of income does the consumer spend on x₁? What percentage of income does the consumer spend on x₂?

ECON MICRO

5th Edition

ISBN:9781337000536

Author:William A. McEachern

Publisher:William A. McEachern

Chapter6: Consumer Choice And Demand

Section: Chapter Questions

Problem 2.5P

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Questions 4 (Choice & Demand). Suppose a consumer's utility function is given by: U(xi, x2 ) = x" a) What is the consumer's demand for x, as a function of income and prices? What is the consumer's demand for x; as a function of income and prices? Use Lagrange method or your intuition. b) What percentage of income does the consumer spend on x;? What percentage of income does the consumer spend on x2?
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