In: Economics
1. Liz has utility given by ?(?1,?2)=?1^7?2^3. If
?1=$10,?2=$15,and I = $100, find Liz’s optimal consumption of good
1. (Hint: you can use the 5 step method or one of the demand
functions derived in class to find the answer).
a) Using the information from question 1, find Liz’s optimal
consumption of good 2.
3. Lyndsay has utility given by ??(?1,?2)=min {?1,?2}. If
?1=$2,?2=$4, ? ?=$12, find Lyndsay’s optimal consumption of good 1.
(Hint: this is Leontief utility).
a) Using the information from question 3, find Lyndsay’s optimal
consumption of good 2.
5. Anya has utility given by ??(?1,?2)=12?1+9?2. If ?1=$4,?2=$2,
?=$20, find Anya’s optimal consumption of good (Hint: this is
linear utility).
a) Using the information from question 5, find Anya’s optimal
consumption of good 2.