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Rachel spends her income, Y, on Rock Shows (R) and Sunglasses (S) with prices pR and pS. Rachel's ...

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Rachel spends her income, Y, on Rock Shows (R) and Sunglasses (S) with prices pR and pS. Rachel's ...

Rachel spends her income, Y, on Rock Shows (R) and Sunglasses (S) with prices pR and pS. Rachel's preferences are given by the Cobb-Douglas utility function
      U(X,Y) = R.8S.2
a.   Write out the Lagrangian for Rachel's utility-maximization problem.
b.   Use the Lagrangian to derive Rachel's optimal choice, (R*,S*).
c.   For a given utility level, U0, derive Rachel's Expenditure function E(pR,pS,U0).
d.   Use the Expenditure function to derive Rachel's compensated demand for Rock Shows.

Textbook

Microeconomics: Theory and Applications with Calculus

Edition: 4^th

Author: Perloff

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MrsAngelD Author

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Thanks for your help!!

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Thanks

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this is exactly what I needed

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