Question: Bob has the utility function u ( x 1 , x 2 ) = 1 0 x 1 1 2 + 2 x 2 .
Bob has the utility function Let and per unit.
with the horizontal axis
and for some arbitrary positive value What the sign and what
the economic interpretation? What happens increases and what the
economic interpretation?
with the horizontal axis. What the
sign and what the economic interpretation? What happens
increases, else constant?
the
marginal utility good per dollar spent that good For what values
have What condition must satisfied for
possible that Bob
buys zero units good when Explain your answers using your results from
part above.
Find his utility
maximizing bundle when his income
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