Marshallian Demands Afc282
1. **Problem Statement:** Find the Marshallian demand functions given a consumer's utility maximization problem with a budget constraint.
2. **General Setup:** The Marshallian demand functions are derived by maximizing utility $U(x_1,x_2)$ subject to the budget constraint $p_1x_1 + p_2x_2 = m$, where $p_1, p_2$ are prices and $m$ is income.
3. **Method:** Use the Lagrangian method:
$$\mathcal{L} = U(x_1,x_2) - \lambda (p_1x_1 + p_2x_2 - m)$$
4. **First Order Conditions:**
$$\frac{\partial \mathcal{L}}{\partial x_1} = \frac{\partial U}{\partial x_1} - \lambda p_1 = 0$$
$$\frac{\partial \mathcal{L}}{\partial x_2} = \frac{\partial U}{\partial x_2} - \lambda p_2 = 0$$
$$p_1x_1 + p_2x_2 = m$$
5. **Solve for $x_1$ and $x_2$:** From the first two equations,
$$\frac{\partial U/\partial x_1}{\partial U/\partial x_2} = \frac{p_1}{p_2}$$
Use this to express $x_2$ in terms of $x_1$, then substitute into the budget constraint to solve for $x_1$ and $x_2$.
6. **Result:** The solutions $x_1^*(p_1,p_2,m)$ and $x_2^*(p_1,p_2,m)$ are the Marshallian demand functions.
Without a specific utility function, this is the general approach to find the Marshallian demands.