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please do not copy other's work,thank you very much!! 1. Suppose that we have two goods, milk x and honey y with prices Pr and
please do not copy other's work,thank you very much!!
1. Suppose that we have two goods, milk x and honey y with prices Pr and py, respectively. Lynn is consumer with income I who inexplicably views these as perfect substitutes, with linear utility function U(x, y) = 3x + 2y (a) Find the marginal utilities of each good Ur and Uy and the marginal rate of substitution MRS. (b) Set up Lynn's utility maximization problem, write the Lagrangian L, and find the first order conditions. (c) Show that you cannot use the first order conditions to obtain a meaningful solution to this problem. (d) Find Lynn's demand functions for milk x(Pr, Py, I) and honey y(Pr, Py, I). Find Lynn's indirect utility function V(Pr, Py, I)Step by Step Solution
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