Assume a consumer has the utility function U (x1 , x2 ) = ln x1 + ln x2 and faces prices p1 = 1 and p2 = 3 . [He,She] has income m = 200 and [his,her] spending on the two goods cannot exceed her income. Write down the non-linear programming problem. Use the Lagrange method to solve for the utility maximizing choices of x1 , x2 , and the marginal utility of income λ at the optimum.

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Consumer Utility U p1 x1 p2x2 Where x1 and x2 represents the quantit... View the full answer