Re: micro

Posted by nidhi on Jun 21, 2009; 5:47am
URL: http://discussion-forum.276.s1.nabble.com/micro-tp3041812p3127561.html

@amit sir
if I use the normal method of taking locus of kink points x+y=2y i.e. x=y +M/(px+py)then i get x*=y*= 3 in each case

but in case 1 :P(2,1) px>py  if i take x=0 and so y=9 then U=9> U=6 when x=y=3 so this means x=0

case2: P(1,2) px<py.. U is maximum at x=y=3

case3: P(1.5,1.5) px=py...U is same at x=0, y=6 and x=y=3

thanx sir i understood the demand fn given by u using this.

but i have a question that does this mean  that the general way of taking the locus of kinked points and using it to solve for equilibrium in case of min function wrong because if we use it here i'll always get x=y=3 but that does not maximise utility in all scenarios.so shud that method not be used.
please explain