Essay
A consumer has preferences given by the constant elasticity of substitution utility function:
U(q₁,q₂)= (q₁.⁵ + q₂.⁵)²
a.Write the Lagrangian for the consumer's maximization problem.
b.Use the Lagrangian to solve for the optimal quantities in terms of the prices and income.
Correct Answer:
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a.L = (q₁.⁵ + q₂.⁵)² + [Y - p₁q₁ - p₂q₂]...View Answer
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Correct Answer:
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