Homework Answers
u(A,B)= AB
The budget constraint is 3A+3B=30
A+B=10
For optimal solution requires MRS= 3/3=1
MRS=B/A
A=B
2A=10
A=5, B=5
5units of apples and bananas are consumed while the utility is u(5,5)=25
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5. (30 points) Ashley splits her income of $30 between apples and bananas. She has a...
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18a
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1. Charlotte loves apples and hates bananas. Her utility function is U (a,b) a-b2/4, where a is the number of apples she consumes and b is the num- ber of bananas she consumes. Assume that Charlotte's income is y • What are the demand functions for Charlotte ? • What are the Engel curves for Charlotte? 2. Wilbur likes both apples and bananas. His utility function is U(a,b) = ab1/2. Assume Wilbur's budget is m, the price of apple is...
Charlotte and Wilber are two agents in a two-agent, two-commodity pure exchange economy where apples and bananas are the two commodities. Charlotte loves apples and hates bananas. Her utility function is Ucu, b) = u 5 , where a is the number of apples she consumes and b in the number of bananas she consumes. Wilber likes both apples and bananas. His utility function is Uca, b) = a +2Vb. Charlotte has an initial endowment of no apples and 8...
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18a
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