Posted by
**Christine** on
.

Briefly explain the following:

(a)Economic cost and accounting cost.

(b)Free market economy and mixed economy.

(c)Marginal utility theory and indifference curves analysis.

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3. please Answer the following questions about Lagrange multipliers and optimal

choice

(a) Let the utility function for good x and y be y + ln (x) (natural loga-

rithm). Write out the Lagrangian function and …rst order conditions.

Find the demand function. Find the income and substitution e¤ects

(in derivative form) of an increase in the price of good x, and y.

(b) Solve for the Cobb Douglas demand functions for utility function

u (x; y) = xy (in this case let + > 1). Also suppose that the

consumer has an endowment of x0 units of good x and y0 units of

good y (so the consumer maximizes utility subject to the constraint

that the value of chosen consumption is less than or equal to px0+qy0 .

Find the income and substitution e¤ects in derivative form.

(c) For utility function y +bx …nd the demand function when p < b and

q = 1. Can you …nd the Lagrangian multipliers for this case?

I have alot of question in micro, if you can help me answer, so I will pay!!

Thank´s