Solved

Suppose Your Tastes Can Be Represented by the Utility Function u(x1,x2)=x11/2+x21/2u \left( x _ { 1 } , x _ { 2 } \right) = x _ { 1 } ^ { 1 / 2 } + x _ { 2 } ^ { 1 / 2 }

Question 21

Essay

Suppose your tastes can be represented by the utility function u(x1,x2)=x11/2+x21/2u \left( x _ { 1 } , x _ { 2 } \right) = x _ { 1 } ^ { 1 / 2 } + x _ { 2 } ^ { 1 / 2 } .Your demand function for x1x _ { 1 } is a. I2p1\frac { I } { 2 p _ { 1 } } .
c. Ip1+p2\frac { I } { p _ { 1 } + p _ { 2 } } .
b. p2Ip1(p1+p2)\frac { p _ { 2 } I } { p _ { 1 } \left( p _ { 1 } + p _ { 2 } \right) }
d. Ip1\frac { I } { p _ { 1 } } if p1<p2p _ { 1 } < p _ { 2 } and 0 if p2<p1p _ { 2 } < p _ { 1 } .

Correct Answer:

verifed

Verified

B
Solving the utility maximiza...

View Answer

Unlock this answer now
Get Access to more Verified Answers free of charge

Related Questions