v. Utility Maximization 2. You consume only two goods, good 1 and good 2. Your utility function is given by U = min{2x1,

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V Utility Maximization 2 You Consume Only Two Goods Good 1 And Good 2 Your Utility Function Is Given By U Min 2x1 1 (234.45 KiB) Viewed 33 times

v. Utility Maximization 2. You consume only two goods, good 1 and good 2. Your utility function is given by U = min{2x1,6x2}. 1. Using the necessary conditions and the above information, write the two first-order conditions that your choice of xy and x, must satisfy to maximize your utility. (Note: You are not being asked to solve for Xi and X2 in this question.) 2. Use your results in part 1 to find your Marshallian demand functions for the two goods. Simplify your answers. You do not have to show that the SOC for a maximum utility is satisfied. 3. Lett be the proportion change in all prices and income. Demonstrate that your Marshallian demand functions for the two goods are homogeneous of degree 0 in prices and income. 4. Is good 1 normal or inferior? How about good 2? Show the basis for your answer. 2 For IV and V: X, is the quantity of good 1, X2 is the quantity of good 2, P, is the price of good 1, P2 is the price of good 2, and m is the nominal income. All prices and income are positive exogenous variables. 5. Find your indirect utility function. Simplify your answer. 6. Find your expenditure function. Show and briefly discuss how you arrived at your answer. 7. Use Shephard's Lemma to find your Hicksian demand functions for the two goods.