3. Assume Matt's utility function is given by u(x1, x2) = (min {1,2})². The prices of goods 1 and 2 are p₁ and p2, respectively, and his income is m. (a) What kind of preference does this utility function represents? (b) Find the optimal levels of consumption for goods 1 and 2.
3. Assume Matt's utility function is given by u(x1, x2) = (min {1,2})². The prices of goods 1 and 2 are p₁ and p2, respectively, and his income is m. (a) What kind of preference does this utility function represents? (b) Find the optimal levels of consumption for goods 1 and 2.
Chapter4: Utility Maximization And Choice
Section: Chapter Questions
Problem 4.8P
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Transcribed Image Text:3. Assume Matt's utility function is given by u(x₁,x2) = (min {x₁, x2})². The prices of goods
1 and 2 are p₁ and p2, respectively, and his income is m.
(a) What kind of preference does this utility function represents?
(b) Find the optimal levels of consumption for goods 1 and 2.
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