Suppose that a consumer has a choice between gallon jugs of milk and half-gallon jugs of milk.
Question:
a. Write a utility function for this consumer.
b. Suppose the price of a half-gallon jug of milk is $2, the price of a gallon jug of milk is $5, and the consumer has $10 to spend on milk. Set up a Lagrangian and derive the first order conditions for the maximization problem.
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a The utility function for perfect substitutes is often tricky If the consumer only cares about how ...View the full answer
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Related Book For
Microeconomics
ISBN: 9781464146978
1st Edition
Authors: Austan Goolsbee, Steven Levitt, Chad Syverson
Question Posted:
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