Instructions: You are not required to print this document and you may discuss your answers
with your classmates, your TAs, and me. Your work must be detailed, neat, and legible. Please
upload a pdf file of your work in gradescope (I use the Adobe Scan app on my phone). This
assignment is worth 1 point.
1. Consider a basket of two goods, good 1 and good 2. Suppose that is the
2𝑥1+𝑥2=12
budget constraint where is the price of good 1, and is the price of good 2. The
𝑝1𝑝2
utility function is . Use the optimality condition and the budget
𝑢(𝑥1,𝑥2)= 𝑥1+ 𝑥2
constraint (feasibility) to solve for .
(𝑥1*,𝑥2*)
