Consider the following utility functions:
(i) u(x,y) = x2y
(ii) u(x,y) = max{x,y}
(iii) u(x,y) = √x + y
(a) For each example, with prices px = 2 and
py = 4 find the expenditure minimising bundle to achieve
utility level of 10.
(b) Verify, in each case, that if you use the expenditure
minimizing amount as income and face the same prices, then the
expenditure minimizing bundle will maximize your utility.