Questions 4 (Choice & Demand). Suppose a consumer's utility function is given by: U(x₁, x₂) = x₁4x 06 a) What is the consumer's demand for x, as a function of income and prices? What is the consumer's demand for x, as a function of income and prices? Use Lagrange method or your intuition. b) What percentage of income does the consumer spend on x₁? What percentage of income does the consumer spend on x₂?
Questions 4 (Choice & Demand). Suppose a consumer's utility function is given by: U(x₁, x₂) = x₁4x 06 a) What is the consumer's demand for x, as a function of income and prices? What is the consumer's demand for x, as a function of income and prices? Use Lagrange method or your intuition. b) What percentage of income does the consumer spend on x₁? What percentage of income does the consumer spend on x₂?
Chapter6: Consumer Choice And Demand
Section: Chapter Questions
Problem 2.5P
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This is macroeconomics theory
Transcribed Image Text:Questions 4 (Choice & Demand). Suppose a consumer's utility function is given by:
U(X1, X2) = x₁4x
a) What is the consumer's demand for x, as a function of income and prices? What is the consumer's
demand for x₂ as a function of income and prices? Use Lagrange method or your intuition.
b) What percentage of income does the consumer spend on x₁? What percentage of income does the
consumer spend on x₂?
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