1. Real wages and productivity-are workers’ paychecks keeping up?
September 3, 2020
Hi, can you please help me with the questions below?
September 3, 2020

Suppose a consumer’s utility function is given by: U(x1, x2 ) = x1 0.4*x2 0.6

a) What is the consumer’s demand for x1 as a function of income and prices? What is the consumer’s demand for x2 as a function of income and prices? Use Lagrangian method or your intuition

b) What percentage of income does the consumer spend on x1? What percentage of income does the consumer spend on x2?

KM
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