Question
Asked Apr 7, 2019

q22-Ginger's utility function is U(x,y)=2x^2y. She has income I=2000 and faces prices Px=$20 and Py=$10. Use the Lagrange Multiplier to determine Ginger's optimal basket given these prices and her income. 

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Step 1

Budget line equation can be derived as follows.

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Step 2

Substitute the value of Y in to utility function.

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Step 3

Differentiate the maximum utility function with the X.

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