Given the utility function: U = X3/4 .Y1/4 Find out the optimal quantities of the two commodities using Lagrange method and simplified procedure, if it is given that price of X is Rs.6 and price of Y is Rs.3 and income is equal to Rs.120.

Given the utility function: U = X3/4 .Y1/4 Find out the optimal quantities of the two commodities using Lagrange method and simplified procedure, if it is given that price of X is Rs.6 and price of Y is Rs.3 and income is equal to Rs.120.

Micro Economics For Today

10th Edition

ISBN:9781337613064

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter6: Consumer Choice Theory

Section: Chapter Questions

Problem 6SQ

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Concept explainers

Form Utility

The term utility in general refers to the satisfaction earned from usage of a particular product or service. Utility always plays an important role because it influences various important elements like demand & thereby the price of the good or service as well. Though utility is not easy to measure, various types of economic models can be used indirectly. There can be various types of utilities like economic utility, marginal utility, cardinal utility, form utility.

Question

Given the utility function:

U = X^3/4.Y^1/4

Find out the optimal quantities of the two commodities using Lagrange method and simplified procedure, if it is given that price of X is Rs.6 and price of Y is Rs.3 and income is equal to Rs.120.

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