Eiise's utility is given by U (9:,y) = $043105. Her endowments of a: = 20 and y = 30. The prices of m and y
Eiise's utility is given by U (9:,y) = $043105. Her endowments of a: = 20 and y = 30. The prices of m and y are unknow and referred to as pm and py reSpectively. (i) Write an expression for Elise's endowment income. (Hint: this depends on endowments and prices) (1 mark) (ii) Using this endowment income, write an expression for Elise's budget constraint. (1 mark) (iii) Write the Lagrangian you would use to compute Elise's demands for a: and y. (1 mark)
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