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Market behaviour of the market

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Reference no: EM132282241

The choice of utility function depends on consumer preference which then determines the market behaviour of the market.

Suppose the utility function of a consumer Cobb-Douglas utility function (CDF)

U(x1, x2) = x13/5x13/5. If p1 = p2 = 2 and I = 14

Optimize the CDF s.t. the budget constraint using the substitution method.

Reference no: EM132282241

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