Jamal has utility function U^B(X1,X2)=(X1+2)(X2+3). He also has income m, and faces prices P 1 and P
Question:
Jamal has utility function U^B(X1,X2)=(X1+2)(X2+3). He also has income m, and faces prices P1 and P2 for goods 1 and 2 respectively.
1.What is Jamal's budget constraint?
2. What is Jamal's MRS of good 1 for good 2?
3. What is Jamal's optimal choice of goods 1 and 2 as functions of his income and prices? (Assume an interior solution.)
4. Korra has utility function UA(X1,X2)=[(X1+2)(X2+3)]2. She has the same income as Jamal, and faces the same prices. Find her optimal consumption bundle. (Assume an interior solution.)
5. A third consumer, Larry has preferences UC(X1,X2))=(X1+2)2(X2+3) and the same income as Jamal and Korra. Find his optimal consumption bundle. (Assume an interior solution.)
6.How does Larry's consumption differ from Korra's(Assume interior solutions)
Expert Answer:
