If x 1 and x 2 are the number of items of two goods bought, a customers
Question:
If x1 and x2 are the number of items of two goods bought, a customer’s utility is
U(x1, x2) = 2x1x2 + 3x1.
The unit cost is $1 for the first good and $3 for the second. Use Lagrange multipliers to find the maximum value of U if the consumer’s disposable income is $100. Estimate the increase in optimal utility if the consumer’s disposable income increases by $6.
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The constraint is gx 1 x 2 x 1 3x 2 100 We need to solve t...View the full answer
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Related Book For 
Applied Calculus
ISBN: 9781119275565
6th Edition
Authors: Deborah Hughes Hallett, Patti Frazer Lock, Andrew M. Gleason, Daniel E. Flath, Sheldon P. Gordon, David O. Lomen, David Lovelock, William G. McCallum, Brad G. Osgood, Andrew Pasquale
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