Re: Micro-consumer theoryy
Posted by CHANGEZ on Jan 28, 2014; 7:46pm
URL: http://discussion-forum.276.s1.nabble.com/Micro-consumer-theoryy-tp7584570p7584594.html
@bhavya, you're absolutely correct that this is a concave function and boundary sol'n will be answer. I did some calculations, Have a look:
Given that U(x,y)=6x2 + 4y2 ; income(m)=$40; P)x=$13 and P)y=$11
Budget equation: 13x + 11y=40
Case 1: Ollie consume all of x ; y=0 and x=40/13 {given that consumption can be in fraction}; U=6.(40/13).(40/13) + 0 = 59.62
Case 2: Ollie consume all of y; x=0 and y=40/11; U=0 + 4.(40/11)(40/11) = 52.89
If we compare, we see that utility is maximum when ollie consumes all of x! Lekin sonia mentioned answer "only y" hai!
URL: http://discussion-forum.276.s1.nabble.com/Micro-consumer-theoryy-tp7584570p7584594.html
@bhavya, you're absolutely correct that this is a concave function and boundary sol'n will be answer. I did some calculations, Have a look:
Given that U(x,y)=6x2 + 4y2 ; income(m)=$40; P)x=$13 and P)y=$11
Budget equation: 13x + 11y=40
Case 1: Ollie consume all of x ; y=0 and x=40/13 {given that consumption can be in fraction}; U=6.(40/13).(40/13) + 0 = 59.62
Case 2: Ollie consume all of y; x=0 and y=40/11; U=0 + 4.(40/11)(40/11) = 52.89
If we compare, we see that utility is maximum when ollie consumes all of x! Lekin sonia mentioned answer "only y" hai!
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