Question
Larry has preferences of Uc (X 1 ,X 2 ) = (X 1 + 2) 2 x (X 2 + 3) Larry's optimal consumption bundle
Larry has preferences of Uc (X1,X2) = (X1 + 2)2 x (X2 + 3)
Larry's optimal consumption bundle is X1 = 2m+6P2-2P1 /3P1 , X2 = m + 2P1-6P2/3P2
Korra's utility function is UA (X1, X2) = [X1 + 2) x (X2 + 3 )]2
Korra's optimal consumer bundle is X1 = m+3P2-2P1/2P1 , X2 = m + 2P1 - 3P2/2P2
How does Larry's consumption differ from Korra's?
a. Larry consumes more X1 and more X2 at the same prices
b. Larry consumes less X1 and more X2 at the same prices
c. Larry consumes less X1 and less X2 at the same prices
d. Larry consumes more X1 and less X2 at the same prices
e. it does not differ. Larry consumes the same amount of X1 and the same amount of X2 at the same prices
f. the answer cannot be determined from the provided information
e. none of these options
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