Suppose the utility function of a consumer is given by U(x, y) = x0.2y0.8, her income is K200 and the prices of good x and good y are K4 and K2 respectively. a) Using the langragian multiplier method, find the quantity of both goods that she should consume in order to maximise her utility given her income of K100 b) Interpret the lagnragian multiplier found in (a).

Suppose the utility function of a consumer is given by U(x, y) = x0.2y0.8, her income is K200 and the prices of good x and good y are K4 and K2 respectively. a) Using the langragian multiplier method, find the quantity of both goods that she should consume in order to maximise her utility given her income of K100 b) Interpret the lagnragian multiplier found in (a).

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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