Question

3) Price and Income changes ["Spoiler Alert" Cersei Lannister gains utility from two primary goods: blackmail and dead enemies. Her function is given by U5xbx, wherex is blackmail and Xa is dead enemies. Help Cersei find her optimal consumption pattern. a) Normalize Cersei's Cobb-Douglas Utility Function, so that the sum of alphas (exponents) is equal 1 b) What is the share of Cersei's budget spent on blackmail and dead enemies? c) Assuming Y-1000 silver stags, find Cersei's "consumption" of blackmail when pb-1, p,- 5 and p,-25. Plot the consumption of blackmail for these three price levels on a pws.xa graph. d) Assuming pd-25, find Cersei's "consumption" of dead enemies when Y=1000,Y-2000 and Y 3000. Plot the consumption ofxa for these 3 income levels on a Y vs. xa graph.

Please solve problem fully for a rating. Thank you.

Answer 1

th 2マ0 om C LLd c) y= 100 5

l) la - 215 0 g-o