An individual consumer consumes two commodities X1 & X2. The utili

Question

An individual consumer consumes two commodities X₁ & X₂. The utility function is

$\cup =X_{1}^{0.4}\; X_{2}^{0.6}$

The price of commodity one is P₁ = Rs.3.00, the price of commodity two is P₂ = Rs.4.00, the individual’s income per period is Rs.108. Determine the utility maximizing level of X₁ & X₂ and derive the demand curves for the two commodities.

09 Feb 2021

Answer :

Word Count : 427

To solve this problem numerically, we follow these steps: --- ### Step 1: Define the Utility Function The consumer's utility function is given as: \[ U = X_1^{0.4} X_2^{0.6} \] where: - $ X_1 $ = Quantity of commodity 1 - $ X_2 $ = Quantity of commodity 2 ### Step 2: Define the Budget Constraint The individual has an income of Rs. 108, and the prices of the two commodities ________ ________ ______ _______ ____ _______ ______ ___ ___ _________ ______.
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