Question: Do all question parts please Use the Cobb-Douglas utility function and budget constraint below to answer questions that follow. u(x1,x2)m=x1x2(1)=p1x1+p2x2 (a) Use the marginal utilities

Do all question parts please

Use the Cobb-Douglas utility function and budget constraint below to answer questions that follow. u(x1,x2)m=x1x2(1)=p1x1+p2x2 (a) Use the marginal utilities of goods 1 and 2,MU1=x1(1)x2(1) and MU2=(1)x1x2. and the budget constraint above to find demand functions for goods 1 and 2 (i.e. solve for x1 and x2 ). Be sure to show your work. (b) Using your answer for part 1a, assume that the consumer has income m=50 and faces prices p1=4 and p2=6. If =0.5, what are the values of x1 and x2 ? (c) Assume again that m=50,p1=4, and p2=6, but now suppose =0.7. What are the new values for x1 and x2 ? How are these different from the answers you got in part 1b ? (d) Now suppose that =0.7,m=50,p1=4, and p2=3. What are the new values for x1 and x2 ? Diagram the consumer's optimal choice from part 1c and add their new optimal choice to the diagram. Use the Cobb-Douglas utility function and budget constraint below to answer questions that follow. u(x1,x2)m=x1x2(1)=p1x1+p2x2 (a) Use the marginal utilities of goods 1 and 2,MU1=x1(1)x2(1) and MU2=(1)x1x2. and the budget constraint above to find demand functions for goods 1 and 2 (i.e. solve for x1 and x2 ). Be sure to show your work. (b) Using your answer for part 1a, assume that the consumer has income m=50 and faces prices p1=4 and p2=6. If =0.5, what are the values of x1 and x2 ? (c) Assume again that m=50,p1=4, and p2=6, but now suppose =0.7. What are the new values for x1 and x2 ? How are these different from the answers you got in part 1b ? (d) Now suppose that =0.7,m=50,p1=4, and p2=3. What are the new values for x1 and x2 ? Diagram the consumer's optimal choice from part 1c and add their new optimal choice to the diagram

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