1) Given U = (x+2)(y+1) and Px = 4, Py = 6, and I = 130 a)...
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Question:
1) Given U = (x+2)(y+1) and Px = 4, Py = 6, and I = 130
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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