Question

h. U(1, 2 For the utility function above, find the consumer's optimal consumption bundle when prices of goods 1 and 2 are pl and p2, and the consumer has an income m. 1. 2. For the utility function above, find the consumer's optimal consumption bundle when prices of goods 1 and 2 are pl and p2, and the consumer has an endowment (el, e2) of the two goods. For each of your answers in question 2, write down the consumer net det demands for the two 3. p1 for which the net demand for good 1 is goods at prices pl and p2. Find the ratio of prices zero. Also find the price ratio at which the net demand of good 2 is zero.

Answer 1

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