Question
1) Given U = (x+1/2)(2y+3) and Px = 4, Py = 5, and B = 90=4x+5y=90 a) Write the Lagrangian function b) Find the optimal
1) Given U = (x+1/2)(2y+3) and Px = 4, Py = 5, and B = 90=4x+5y=90
a) Write the Lagrangian function
b) Find the optimal values of x* and y*
c) Is the second-order sufficient condition for maximum satisfied?
d) Does the answer in (b) give any comparative-static information? What?
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Economics Principles and Policy
Authors: William J. Baumol, Alan S. Blinder
12th edition
978-0538453677, 538453672, 978-0538453622, 538453621, 978-0538453653
