Problem Code: 200609MICRO

[Amit Goyal]

Suppose a consumer has a utility function u(x, y) = (2/3)log(x)+(1/3)log(y). In addition the consumer has a rationing constraint: he is not allowed to buy more than 5 units of good x. Find the demand function for x.

[Smriti]

if py=1, then x=(2/3)(m/px) for all x<=5 or else x=5

[Kamal1]

Why the condition for Py? Thanks..

[Amit Goyal]

x =  min{(2/3)(m/p(x)), 5}
p(x) is price of x