Jason likes ribs, X1, and fried chicken, X2. His utility function is U(X1, X2) = 10...

Jason likes ribs, X1, and fried chicken, X2. His utility function is U(X1, X2) = 10 (X1) 2 (X2). His weekly income is $90, which he spends on ribs and chicken only. If he pays $10 for a slab of ribs and $5 for a chicken, to maximize his utility, what is his optimal consumption bundle?

A. Jason would like to choose the consumption of ?1 and ?2 so that he maximizes his utility. Write down the formal utility maximization problem for Jason.

B. Set up the Lagrangian function for the utility maximization problem.

C. Write down the first order conditions (F.O.Cs) under the Lagrangian Method.

D. How many ?1 and ?2 does Jason would like to consume?

Solutions

Expert Solution

Rahul Sunny answered 1 year ago

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