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MrsAngelD MrsAngelD
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6 years ago
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

Microeconomics: Theory and Applications with Calculus


Edition: 4th
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forrestforrest
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