Consider a consumer who buys commodity x&y at per unit prices px=#2, py=#5 respectively.. If the money income of the consumer is #105 for the period & its utility function is xy.. Determine the consumer optimal purchase for a given desire to maximize utility..dee man Answers. Y=#105 P1=#2 P2=#5 Q1=? Q2=? U=q1q2 and Y=p1q1+p2q2 V=q1+q2+π(Y-p1q1-p2q2) V=q1q2+π(105-2q1-5q2) dv/dq1=q2-2 dv/dq2=q1-5 dv/dπ=105-2q1-5q2 q2/q1=π2/π5=2/5 q2=2/5q1 and q1=5/2q2 105-2q1-5q2=0 105-2q1-5(2/5q1)=0 105-2q1-2q1=0 105-4q1=0 -4q1=-105 q1=26.25commodity x 105-2q1-5q2=0 105-2(5/2q2)-5q2=0 105-5q2-5q2=0 105-10q2=0 -10q2=-105 q2=-105/-10 q2=10.5cimmidity y The consumer implication of our findings is that for consumer to have maximum satisfaction or utility of the given budget constraint/line, he has to buy 26.25quantities of commodity X and 10.5quantities of commodity Y.... Thats the solution to the AEC assignment for those who were not in class..... Dee man..
Posted on: Sun, 17 Aug 2014 19:52:31 +0000
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