Question
For the next two questions, consider a consumer with utility function U(x 1 , x 2 ) = x 1 +x 1 x 2 +x
For the next two questions, consider a consumer with utility function U(x1, x2) = x1+x1x2+x2 who obeys the standard budget constraint P1x1 + P2x2 = Y . Formulating the problem formally, the consumer solves:
max x1 + x1x2 + x2
s.t. P1x1 + P2x2 = Y
what is the optimal for x1 and x 2, are they substitutes or complements ?
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Mathematical Economics
Authors: Wade Hands, D Wade Hands
2nd Edition
0195133781, 9780195133783
