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Unformatted text preview: 1 +3lnX 2 a. Find the Marginal Rate of Substitution b. Derive the demand functions for X 1 , and X 2 , assuming the consumer buys some of both goods c. For I=1000, P 1 =20 and P 2 =15, find the consumers optimal choices and utility d. Explain what happens to optimal choices and utility if the P 1 were to decrease to 10. 4. For the utility function U= 4X 1 + 2lnX 2 a. Find the Marginal Rate of Substitution b. Derive the demand functions for X 1 , and X 2 , assuming the consumer buys some of both goods 5. For the utility function U= 20X 1 X 1 2 + 2X 2 a. Find the Marginal Rate of Substitution b. Derive the demand functions for X 1 and X 2 , assuming the consumer buys some of both goods...
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This note was uploaded on 09/15/2009 for the course ECON 420 K taught by Professor Bronars during the Fall '09 term at University of Texas at Austin.
 Fall '09
 Bronars
 Utility

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