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The utility function is u(x1,x2)=ax1+bx2, with a>0,b>0. The budge set (constraint) is p1x1+x2=w where the price of good 2 is normalized to 1 , and
The utility function is u(x1,x2)=ax1+bx2, with a>0,b>0. The budge set (constraint) is p1x1+x2=w where the price of good 2 is normalized to 1 , and w is consumer's total wealth. Find the optimal consumption bundle (x1,x2) as a function of w and p1 ? Note that this is similar to the perfect substitute case shown in lecture notes 2 , so you need to use a graph to consider 3 difference cases. The utility function is u(x1,x2)=ax1+bx2, with a>0,b>0. The budge set (constraint) is p1x1+x2=w where the price of good 2 is normalized to 1 , and w is consumer's total wealth. Find the optimal consumption bundle (x1,x2) as a function of w and p1 ? Note that this is similar to the perfect substitute case shown in lecture notes 2 , so you need to use a graph to consider 3 difference cases
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