Your preferences are represented by the utility function U = (x1.5 + x2.5)2, where the price of good 1 is 4 PHP and the price of good 2 is 3 PHP. Your income is given by 50 PHP. • Set up the Lagrangean function for this utility-maximization problem with constraint. • Compute for the utility-maximizing quantities of x₁ and x2. • What is the maximum level of utility you can attain given your utility function and budget con- straint?

Your preferences are represented by the utility function U = (x1.5 + x2.5)2, where the price of good 1 is 4 PHP and the price of good 2 is 3 PHP. Your income is given by 50 PHP. • Set up the Lagrangean function for this utility-maximization problem with constraint. • Compute for the utility-maximizing quantities of x₁ and x2. • What is the maximum level of utility you can attain given your utility function and budget con- straint?

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter3: Preferences And Utility

Section: Chapter Questions

Problem 3.3P

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