Question: Suppose an individual has the utility function with a budget constraint given by. Verify that the following three methods of solution are equivalent (30 marks):

Suppose an individual has the utility function with a budget constraint given by. Verify that the following three methods of solution are equivalent (30 marks):

(a) Use the MRS=price ratio "tangency rule", find the optimal ratio of input demands as a function of price ratio ; assuming that the budget constraint is binding find and in terms of , and m.

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