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N1 = Exercise: Sara only buys two goods, bagels (x,) and cream cheese (x2). In order to maximize her utility, she always spends 40% of
N1
= Exercise: Sara only buys two goods, bagels (x,) and cream cheese (x2). In order to maximize her utility, she always spends 40% of her income on bagels and 60% of her income on cream cheese. Which of the following utility functions is consistent with Sara's spending habits? (Hint: You need to find out if any of the four equations below have p x, 1X, = 0. 4m) a ) U(x , x ) = x1 X2 b ) U ( x , x, ) = x x23 c) U( x , x, ) = x2x2 d) U( x , x ) = xx2 e) None of the aboveStep by Step Solution
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