Question

Maximise square root utility Consumption of good 1 is denoted x_1 and consumption of good 2...

Maximise square root utility

Consumption of good 1 is denoted x_1 and consumption of good 2 by x_2. The agent has the utility function u(x_1, x_2) = √x_1 + √x_2 (the square root of x_1 plus the square root of x_2). Here, √ denotes the square root, * multiplication, + addition.

Maximize u by choosing (x_1,x_2) subject to the budget constraint x_1 +3*x_2<=12 and the minimal consumption amount constraints x_1>=0 and x_2>=3.35. Write the quantity x_1 of good 1 that the agent consumes in the solution to the maximisation problem. Write it as a number in decimal notation with at least two digits after the decimal point. No fractions, spaces or other symbols.

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Consider the image among for the numerical solution to the problem. The consumers optimal consumption bundle to maximize utility is at x1=1.95 and x2=3.35

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Social planner’s problem, two constraints 2 Five units of good 1 and five units of good...
Social planner’s problem, two constraints 2 Five units of good 1 and five units of good 2 are available. Consumption of good 1 is denoted x_1 and consumption of good 2 by x_2. There are two agents: A and B. Their utility functions are u_A(x_1, x_2) = ln(x_1) +a*ln(x_2) and u_B(x_1, x_2) = x_1 +b*x_2, where a=1.35 and b=0.86. Here, ln denotes the natural logarithm, * multiplication, + addition. Maximize u_A subject to the constraints u_B=1 and that each agent’s...
Social planner’s problem, two constraints 2 Five units of good 1 and five units of good...
Social planner’s problem, two constraints 2 Five units of good 1 and five units of good 2 are available. Consumption of good 1 is denoted x_1 and consumption of good 2 by x_2. There are two agents: A and B. Their utility functions are u_A(x_1, x_2) = ln(x_1) +a*ln(x_2) and u_B(x_1, x_2) = x_1 +b*x_2, where a=1.35 and b=0.86. Here, ln denotes the natural logarithm, * multiplication, + addition. Maximize u_A subject to the constraints u_B=1 and that each agent’s...
Social planner’s problem, two constraints 1 Five units of good 1 and five units of good...
Social planner’s problem, two constraints 1 Five units of good 1 and five units of good 2 are available. Consumption of good 1 is denoted x_1 and consumption of good 2 by x_2. There are two agents: A and B. Their utility functions are u_A(x_1, x_2) = ln(x_1) +a*ln(x_2) and u_B(x_1, x_2) = x_1 +b*x_2, where a=0.54 and b=1.52. Here, ln denotes the natural logarithm, * multiplication, + addition. Maximize u_A subject to the constraints u_B=1 and that each agent’s...
Maximise the utility u=5*ln(x-1)+ln(y-1) by choosing the consumption bundle (x,y) subject to the budget constraint x+y=10....
Maximise the utility u=5*ln(x-1)+ln(y-1) by choosing the consumption bundle (x,y) subject to the budget constraint x+y=10. Here, ln denotes the natural logarithm, * multiplication, / division, + addition, - subtraction. Ignore the nonnegativity constraints x,y>=0. Write the quantity x in the utility-maximising consumption bundle (x,y). Write the answer as a number in decimal notation with at least two digits after the decimal point. No fractions, spaces or other symbols.
The problem is to maximise utility u(x, y) =2*x +y s.t. x,y ≥ 0 and p*x...
The problem is to maximise utility u(x, y) =2*x +y s.t. x,y ≥ 0 and p*x + q*y ≤ w, where p=13.4 and q=3.9 and w=1. Here, * denotes multiplication, / division, + addition, - subtraction. The solution to this problem is denoted (x_0, y_0) =(x(p, q, w), y(p, q, w)). The solution is the global max. Find ∂u(x_0,y_0)/∂p evaluated at the parameters (p, q, w) =(13.4, 3.9, 1). Write the answer as a number in decimal notation with at...
A consumer likes two goods; good 1 and good 2. the consumer’s preferences are described the...
A consumer likes two goods; good 1 and good 2. the consumer’s preferences are described the by the cobb-douglass utility function U = (c1,c2) = c1α,c21-α Where c1 denotes consumption of good 1, c2 denotes consumption of good 2, and parameter α lies between zero and one; 1>α>0. Let I denote consumer’s income, let p1 denotes the price of good 1, and p2 denotes the price of good 2. Then the consumer can be viewed as choosing c1 and c2...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT