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④
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Assume households function
a
utility is ucx y ) x
y
-
.
-

and it 's income is 1=100 and the price for

good y is
Py S
-
-

Derive formally the households demand function for

good x .

Given information :

xd
' a
"4 b
U Cx y )
yo
-

'

y
Utility function
=
U Cx y )
- .

=
x .
,
,

Income I =
100

Price for good y Py =

5

is
The
Lagrangian constrains 0
: =

,
( Px -

X t Py -

Y -
Income )
-
"" "b
L =
×
.

y
-
X ( R
,
-

X t gy -

100 )
-

Utility function e

The partial derivatives are :

Price for good x times

quantity
p→ → not
given
at
2x
= 0,4 '

¥ -
X .

Px -

X =
O

→ Information is given , see Lang rangi an

2L
y y
= 0.6 .

F -
S X =
O

f! =
Px -

X t SX -
100 = 0 → All information put
together

Then :
100 Euros 40
0,4 .

Demand function
X = =
=

for good x
Px .

X Euros Iunits p× . ×

0.6 .
100 Euros
y
.

and 12
: .

5 Euros 1 units