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Consider a consumer with preferences represented by a utility function u(x1, x2) = max{x1, x2}. The prices of x1 and x2 are denoted as p1
Consider a consumer with preferences represented by a utility function u(x1, x2) = max{x1, x2}. The prices of x1 and x2 are denoted as p1 and p2 and income is denoted as m.
(a)Illustrate the indifference curves of this preference relation.
(b) Write down the consumer's utility maximisation problem.
(c) Given p = (p1, p2) > 0 and income m > 0, derive the consumer's demand functions.
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