If x1 and x2 are the number of items of two goods bought, a customers utility is U(x1

Chapter 8, Problem 25

(choose chapter or problem)

If x1 and x2 are the number of items of two goods bought, a customers utility is U(x1, x2) = 2x1x2 + 3x1. The unit cost is $1 for the first good and $3 for the second. Use Lagrange multipliers to find the maximum value of U if the consumers disposable income is $100. Estimate the new optimal utility if the consumers disposable income increases by $6.

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