Tina consumes only two goods , x and y, and her utility function is u(x1,x2) = x12+x22. (1) Find the demand function that solves first order conditions with budget constraint. (2) Please show that Tina's utility function is not convex. (3) Find the utility at the corner (spending all money on either x1 or x2) and compare the utility with the solution
Tina consumes only two goods , x and y, and her utility function is u(x1,x2) = x12+x22. (1) Find the demand function that solves first order conditions with budget constraint. (2) Please show that Tina's utility function is not convex. (3) Find the utility at the corner (spending all money on either x1 or x2) and compare the utility with the solution
Chapter7: Consumer Choice: Maximizing Utility And Behavioral Economics
Section: Chapter Questions
Problem 6QP
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Tina consumes only two goods , x and y, and her utility function is u(x1,x2) = x12+x22.
(1) Find the demand function that solves first order conditions with budget constraint.
(2) Please show that Tina's utility function is not convex.
(3) Find the utility at the corner (spending all money on either x1 or x2) and compare the utility with the solution of (1).
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