IQRA UNIVERSITY IU

Managerial Economics
Assignment # 1
10 Marks

Q1) Given the utility function:

U = X 3/4 . Y1/4
Estimate the demand functions of commodity X and commodity Y using Lagrange method, if
it is given that price of X is Px and price of Y is Py and Income is M.

Q1) Given the utility function:

U = X 3/4 . Y1/4
Find out the optimal quantities of the two commodities using Lagrange method and
simplified procedure, if it is given that price of X is Rs.6 and price of Y is Rs.3 and income is
equal to Rs.120.