Suppose a consumer has the following utility function: u(x,y) = x??(1-?) Price o f x= $3,...

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Suppose a consumer has the following utility function: u(x,y) = x??(1-?) Price o f x= $3,...

Suppose a consumer has the following utility function:

u(x,y) = x^??^(1-^?⁾

Price o f x= $3, price of ? = $7, and ? (alpha) = 0,3, and wage=10.

a) what is the Hicksian demand for goods x and y? Use the LaGrange method or MRS.

b) Draw the graph of the minimization (budget constraint).

Please provide step behind the solution. Thanks!

business economics

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Answer 1

Answer #1

U Ми - - 0-3 м 2 25 3 ... 3 - 0. 2 Ato optimum, mRs = 0.3 o 2 и - - 1 - - - U А ч и - и Ч Ч optium Budget constrrent

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Answer 2

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