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Determine the optimal consumption bundle

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Reference no: EM133248515

Question

Consider the utility function of the following form: ??(??, ??) = √????. The price of good x is $20 and good y is $10. Assume total expenditure on two goods cannot exceed $200.

a. Use the Lagrange method to determine the optimal consumption bundle. Show all working.

b. Verify the optimal consumption bundle in a) above satisfy the consumer equilibrium condition.

Reference no: EM133248515

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