Person A, B, and C have utility functions of U1=(R+6)c1, U2=(R+4)c2, and U3=(R+2)c3, budgets are I1,...

Person A, B, and C have utility functions of U1=(R+6)c1, U2=(R+4)c2, and U3=(R+2)c3, budgets are I1, I2, I3, c=expenditures on everything else R=1 is the house is purchased, 0 otherwise. What is the most each of the is willing to contribute to the house? If I1=5,800 I2=3,500 and I3= 2,100 would they buy the house at $4000 explain

Expert Solution

AP=MAP is only used for easiness you may take any variable. As you like..

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Rahul Sunny answered 1 year ago

Let y = 4 -6 6 U1 = -2 -5 1 U2 = -2 2 6...

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Max Subject to: 35A + 20B c1:A+B≤10 c2:A−B≤4 c3:4A+B ≥ 15 c4:9A+6B ≤ 75 A,B >...

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