Question: Consider the utility maximization problem: max U(x,y) = x +y subject to x+4y=100 a) Using the Lagrange method, find the quantities demanded for the two

Consider the utility maximization problem: max U(x,y) = x +y subject to x+4y=100

a) Using the Lagrange method, find the quantities demanded for the two goods.

b) Suppose income increases from 100 to 101. What is the exact increase in the optimal value of U(x,y)? Compare with the value found in (a) for the Lagrange multiplier.

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