Each week an individual with income m consumes quantities x and y of two goods whose...

 

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Each week an individual with income m consumes quantities x and y of two goods whose prices are p and q. Her utility function is U(x, y) = a ln x + lny (a,> 0) which is defined for x, y >0. Find the demand functions. Now suppose the individual works for / hours per week out of an available L hours so that she has (L-1) hours of free time and suppose her utility function is now V(x,y,l) = a ln x+lny+yln(L-l) (a,,y> 0) which is defined for x, y > 0 and 01 (a + B)wL/y? wwwwwww Each week an individual with income m consumes quantities x and y of two goods whose prices are p and q. Her utility function is U(x, y) = a ln x + lny (a,> 0) which is defined for x, y >0. Find the demand functions. Now suppose the individual works for / hours per week out of an available L hours so that she has (L-1) hours of free time and suppose her utility function is now V(x,y,l) = a ln x+lny+yln(L-l) (a,,y> 0) which is defined for x, y > 0 and 01 (a + B)wL/y? wwwwwww

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To find the demand functions we need to maximize the utility function with respect to the quantities x and y This can be done using the method of Lagr... View the full answer