Question

Assume a consumer with the utility function
U = U (X, Y) = (X + 2)(Y + 1)
and the budget constraint (M = 95, Px = 10, and Py = 5):
95 = 10X 15Y
a. Set up the constrained maximization problem, and derive the first-order conditions.
b. Find the amounts of goods X and Y the consumer will purchase in equilibrium.



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  • CreatedNovember 18, 2014
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