2. Suppose that Maggie cares only about chai and bagels. Her utility function is U = CB,...

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2. Suppose that Maggie cares only about chai and bagels.

Her utility function is U = CB, where C is the number of cups of chai she drinks in a day, and B is the number of bagels she eats in a day. The price of chai is $3, and the price of bagels is $1.50. Maggie has $6 to spend per day on chai and bagels.

a. What is Maggie’s objective function?

b. What is Maggie’s constraint?

c. Write a statement of Maggie’s constrained optimization problem.

d. Solve Maggie’s constrained optimization problem using a Lagrangian.

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Microeconomics

ISBN: 9780716759751

1st Edition

Authors: Austan Goolsbee, Steven Levitt, Chad Syverson

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Question Posted: Oct 16, 2024 01:00 AM

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2. Suppose that Maggie cares only about chai and bagels. Her utility function is U = CB,...

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Microeconomics

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