Suppose an individual consumers two goods, with utility function U (x1; x2) = x1 + 6(x1x2)^1/2 + 9x2. Formulate the utility maximization problem when she faces a budget line p1x1 + p2x2 = I. Find the demand functions for goods 1 and 2.
(b) Now consider an individual consumers with utility function U (x1; x2) = x1^1/2 + 3x2^1/2. Formulate the utility maximization problem when she faces a budget line p1x1 + p2x2 = I. Find the demand functions for goods 1 and 2.
Get Answers For Free
Most questions answered within 1 hours.