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    Marshallian demand functions

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    Consider the problem of maximizing u = (x1x2)2 subject to p1x1 + p2x2 = y. Derive the Marshallian demand functions and the indirect utility function; and confirm that Roy's identity holds.

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    https://brainmass.com/economics/utility-demand/marshallian-demand-functions-10201

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    Consider the problem of maximizing u = (x1x2)2 subject to p1x1 + p2x2 = y. Derive the Marshallian demand functions and the indirect utility function; and confirm that Roy's identity holds.

    Since we want to max U=(x1x2)2 subject to p1x1 + p2x2 = y
    We can write the Lagrangian Function as:
    L = (x1x2)2 - m (p1x1 + p2x2 - y)
    Where m >= 0 to be determined
    Then take the first order condition:
    DL/dX1 = 2X1 X22 - mp1 = 0 or ...

    Solution Summary

    Marshallian demand Functions and indirect utility functions are noted. Maximizing problems are examined.

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