Can someone help me with a quasilinear equation?
There are 2 goods x1 and x2. utility function: u(x2, x2) = (x1)^1/2 + x2 with budget constraint Y=x1p1+x2p2, so what is the demand function for good x. thank you
Answer:
I forgot how to calculate that but the MRS (marginal rate of substitution) has the relationship MU1/MU2 = marginal utility of x1 over the marginal utility of x2 which is = p1/p2 which = change in x2/change in x1.
MU1 = 1/2x1^(1/2)
MU2 = 1
Therefore MRS = 1/2X1^(1/2) = p1/p2 = change in x2/change in x1 and solve for x1 or x2. you did not specify which you want to find.. you only said find the demand for good x...
Another relationship might be simpler and that is change in x1 = MU1/p1
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Answer:
I forgot how to calculate that but the MRS (marginal rate of substitution) has the relationship MU1/MU2 = marginal utility of x1 over the marginal utility of x2 which is = p1/p2 which = change in x2/change in x1.
MU1 = 1/2x1^(1/2)
MU2 = 1
Therefore MRS = 1/2X1^(1/2) = p1/p2 = change in x2/change in x1 and solve for x1 or x2. you did not specify which you want to find.. you only said find the demand for good x...
Another relationship might be simpler and that is change in x1 = MU1/p1
More Questions and Answers: