Question: Question 5. Suppose a consumer's utility function is given by: u(x1, x2) = x1 2 + x2 2 a) What is the optimal consumption bundle

Question 5. Suppose a consumer's utility function is given by: u(x1, x2) = x1 2 + x2 2

a) What is the optimal consumption bundle x1 * , x2 * if p1 = 1, p2 = 1 and m=20?

b) What is the consumer's utility at this optimal bundle?

c) What percentage of income does the consumer spend on good 1? What percentage of income does the consumer spend on good 2? Show your work.

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