Ajaz hussain do not distribute sub this in even

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Unformatted text preview: re she has monotone preferences: ⏟ She will have monotone preferences when , , ⏟ . The UMP simplifies to: .. , , Can we drop any of the non-negativity constraints? Do the 3 step check above: ❶ Check if utility function: (or indeterminate) at any bundle on the y-axis (except the origin). Substitute , into the , into the ⏟ This means can be a solution and we cannot drop the constraint . ❷ Check if utility function: (or indeterminate) at any bundle on the x-axis (except the origin). Substitute ⏟ This means can be a solution and we cannot drop the constraint ❸ Check if (or indeterminate) at any bundle in the interior. Substitute ⏟ . , into the utility function: ⏟ Unfortunately, we cannot further simplify the linear UMP and we must solve: , .. , , We did in fact solve this UMP earlier and we will examine the economics of the linear and other utility models in chapter 4. 40 ECO 204 CHAPTER 3 Utility Maximization Problems (this version 2012-2013)...
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