Question: a student propose a utility function as follows: U(x1 , x2) = x 1 2 + x 2 2 Part a) graphically show that this

a student propose a utility function as follows: U(x1 , x2) = x12 + x22

Part a)

graphically show that this proposed utility function violates "average is better than extreme".

Part b)

graphically show that for this utility function, the tangency condition does not lead to the optimum given prices (p1 , p2) = (2 , 1) and m = 3.

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