Question: min{1, 2} E= 11+22 subject to =U= (1^)(2^); +=1 : =1/2; =1/2; 1= 1; 2=1; =50 1: = 1/2; = 1/2; 1= 1; = /;
min{1, 2} E= 11+22
subject to
=U= (1^)(2^);
+=1
: =1/2; =1/2; 1= 1; 2=1; =50
1: = 1/2; = 1/2; 1= 1; = /; = 50
A) Find the equilibrium values for 2, 1 for Baseline and Case 1
B) Draw a two panel graph (on the top panel draw the budget line and IC and on the bottom panel draw the desired demand curve) and draw the hicksian demand function.
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