Question: Please help with this question. 1. (2.5 points) Consider the following utility functions: . u(x1, 2) = x4x2. 1/4 1/4 . u(x1, '2) = 21
Please help with this question.

1. (2.5 points) Consider the following utility functions: . u(x1, 2) = x4x2. 1/4 1/4 . u(x1, '2) = 21 2 . u(x1, '2) = 2123. . u(x1, X2) = 5x1 + 3.2. . u(X1, X2) = min {2x1, 3x2}. (a) Which utility functions, if any, represent the same preference ordering? (0.5 point) (b) Suppose that the constraints are as follows: I > pill + p2x2, x1 2 0, x2 2 0 where I is income, p1 is the price of good 1 and p2 is the price of good 2. For each utility function, i. Find the demand functions for good 1 and good 2. It is important to pro- vide details about the solution of the maximization problem, i.e., interior vs. corner, binding constraint vs. non-binding constraint, unique solution or multiple solutions? (1 point) ii. Find Ort/01, Oxx/Op, and Oxt/Op2. (1 point)
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
