Determine interior v. corner solution and explain

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Reference no: EM131238762

Utility function of Inzaghi is given as u(x, y) = 2x²y. His income is $m, to spend onconsumption of x and y. Assume that price of y is 3 times the price of x, i.e. Py = 3Px.

a. State the optimization problem for Inzaghi, including the constraints.

b. Determine interior v. corner solution, and explain.

c. Solve for Inzaghi’s optimal consumption choice (x*, y*). (Note that your answers shouldbe expressed in terms of m and Px only)

Reference no: EM131238762

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