Question: If x 1 and x 2 are the number of items of two goods bought, a customers utility is U(x 1 , x 2 )

If x₁ and x₂ are the number of items of two goods bought, a customer’s utility is

U(x₁, x₂) = 2x₁x₂ + 3x₁.

The unit cost is $1 for the first good and $3 for the second. Use Lagrange multipliers to find the maximum value of U if the consumer’s disposable income is $100. Estimate the increase in optimal utility if the consumer’s disposable income increases by $6.

Step by Step Solution

★★★★★

3.54 Rating (164 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

The constraint is gx 1 x 2 x 1 3x 2 100 We need to solve t... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Applied Calculus Questions!

Name three applications for feedback control systems.

A consumer's utility function is given by Ux1,x2=2x1x2+3x1U(x1,x2) = 2x1x2 + 3x1 where x1*1 and x2 %3D X2 denote the number of items of two goods G1 and G2 that are bought. Each item costs $1 for G1...

List three specific parts of the Case Guide, Objectives and Strategy Section (See below) that you had the most difficulty understanding. Describe your current understanding of these parts. Provide...

If x1 and x2 are the values of a random sample of size 2 from a population having a uniform density with Î± = 0 and Î² = Î¸, find k so that Is a (1...

2. A consumer's utility function is given by U(x1, x2) = 2x1x2 + 3x1 where x1 and x2 denote the number of items of two goods G1 and G2 that are bought. Each item costs $1 for G1 and $2 for G2. Use...

A consumer's utility function is given by U(x 1 , x 2 ) = 2x 1 x 2 + 3x 1 where x 1 and x 2 denote the number of items of two goods G1 and G2 that are bought. Each item costs $1 for G1 and $2 for G2....

Please give me the ans of this question in 30mins 3. A consumer's utility function is given by U(x1, x2)=2x1x2+3x1 where x1 and x2 denote the number of items as two goods that are bought . Each item...

5. (10 points) Determine whether solutions exist for the below quadratic equation. And find the solution(s). 2x2 + x - 10 =0 6 . (10 points) A consumer's utility function is given by U(x1, X2) = X1...

1) A consumer's utility function is given by U(x1, x2) = 2x1 x2 + 3x1 where x1 and x2 denote the number of items of two goods G1 and G2 that are bought. Each item costs $1 for G1 and $2 for G2. What...

Please solve the below questions so I can learn it 1) A consumer's utility function is given by U(x1, X2) = 2x1 X2 + 3x1 where x1 and x2 denote the number of items of two goods Gl and G2 that are...

Explain. the following questions as attached below. Question 1 Consider an economy with / consumers and L goods. For each consumer ie {1, ..., /}, the consumption set is R4. Her utility function is...

Is gross domestic product an accurate measure of the standard of living? Why or why not?

In your future endeavors, how do you think you might find yourself applying statistical concepts Under what conditions might you find yourself creating an Excel pie chart, running a correlation, or...

Which of the following is an example of organizational challenge? a. New Learning b. Distrust on Management c. Threat to Power d. Friendship among Old Employees

What are the major categories of assets and liabilities?

Write each expression in the form e kx for a suitable constant k. Vex.ex 7x -3x e -4.x e

Write each expression in Exercises in the form 2 kx or 3 kx , for a suitable constant k. 2x 3-5x 16x 6x3-2x8-x

State the main features of the graph of y = ln x.

On November. 1 of Year 1, Drucker Co, acquired the following imvestments in equity securities measured at FV.NI. On December 31, the company's year-end. the quoted market prices were as follows:...

3:Chapter 3.1 Where a business activity has both fixed and variable costs, as volume alters the variable cost per unit of output stays the same, but the fixed cost per unit changes. Comment on this...

The last option is $28350 A road building company is purchasing an excavator for $500,000 The corporate tax rate is 45% and the expected after-tax rate of retin is 12% What would be the present value...