Question
4. Use the Kuhn-Tucker conditions to derive demand at general prices and wealth levels (i.e. pi , w should show up in your demand function)
4. Use the Kuhn-Tucker conditions to derive demand at general prices and wealth levels (i.e. pi , w should show up in your demand function) for the following utility maximization problems and discuss whether the Kuhn-Tucker sufficiency conditions are satisfied?
(a) u(x1, x2) = ln(x1 + 1) +ln(x2 + 1) subject to p1x1 +p2x2 m, x1 0, x2 0 where p1 > 0, p2 > 0 and m > 0.
(b) u(x1, x2) = x 2 1 + (x2 5)2 s.t. x1 0, x2 0, and 2x1 + x2 4 where p1 > 0, p2 > 0 and m > 0.
(c) u(x1, x2) = x1x2 subject to x1 + x2 100, x1 40, x1 0, x2 0 where p1 > 0, p2 > 0 and m > 0.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started