Demand function doubt

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Demand function doubt

Spiti
This may be a little bit silly.., What is (marshallian) demand function for x, given U(x,y)=x^2+y^2, Income is m and prices p1 and p2..
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Re: Demand function doubt

The Villain
Use lagrange
Z= x^2+y^2.+lamda(m-p1x-p2y)
just find x and y fr here...thats ur marshallian dd
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Re: Demand function doubt

Dreyfus
In reply to this post by Spiti
This utility func represents concave preference....when p1>p2 then consumer will exhaust all his income on x2 so demand func will be x1=0 x2=m/p2
similarly when p2>p1 then x1=m/p1 nd x2=0
Nd when prices are equal! Either x1=0 x2=m/p2 or x1=m/p1 x2=0
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Re: Demand function doubt

Spiti
So, the demand curve would be exactly like in case of perfect substitutes. Correct?
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Re: Demand function doubt

Dreyfus
No! In case of perfect substitutes when prices are same consumer chooses to consume both goods but in this case he only consumes exactly one goods even when prices are same!
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Re: Demand function doubt

phelps.phan
In reply to this post by Spiti
its more like a max function..infact the demanded bundles are exactly like max function(i'm not very sure though)