Question: In class we discussed utility maximization forf consumers and cost minimization for firms. Here we consider cost minimization for consumers. Consider the problem min pxX
In class we discussed utility maximization forf consumers and cost minimization for firms. Here we consider cost minimization for consumers. Consider the problem min pxX + pyY such that U(X; Y ) = : The consumer minimizes the cost of buying goods X and Y such that utility is equal to . a) Sketch a diagram that illustrates the objective, constraint, and optimal choice of X and Y b) Let px = 1, py = 1 and U(X; Y ) = XaYa. Find the optimal quantities for X and Y . c) How much money does the consumer spend to purchase these optimal quantities
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