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MATERIALMAN'S REQUEST INDIVIDUAL Form

MATERIALMAN'S REQUEST INDIVIDUAL Form

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all right suppose that we've got an individual with a very generic income constraint y and it can be spent on food or shelter and they have utility function given by f raised to the power of alpha a greek letter times s raised to the power of one minus alpha so this is a cobb douglas function but it's more generic than usual because i'm not even telling us what the exponents are i'm just using greek letters because we'll solve it once for them and we can solve it for anybody okay let's set up the lagrangian and solve this generic problem okay so the lagrangian remember we have to the first thing is the objective function and consumer's objective is normally to maximize their income subject to a budget constraint so we want to maximize this so we write that first and then we're going to add in our constraint remember we use the greek letter and we have y minus bf times f minus ps times s step two take the derivative with re

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