Consider the following consumer utility maximization problem: ModifyingBelow max With x comma y left parenthesis 4 plus x right parenthesis left parenthesis 2 plus y right parenthesismaxx,y (4+x)(2+y) s.t. 5 x plus 18 y less than or equals 2315x + 18y ≤ 231 x greater than or equals 0 comma y greater than or equals 0x≥0, y≥0 a. Identify the following elements of the consumer's problem (Note: I am not asking you to "solve" this problem, but to tell me what each of the following are equal to in the consumer's problem above): u left parenthesis x comma y right parenthesis equalsu(x,y) =left parenthesis 4 plus x right parenthesis left parenthesis 2 plus 7 right parenthesis(4+x)(2+7) Upper P Subscript x Baseline equalsPx =11 Upper P Subscript y Baseline equalsPy =11 Upper I equalsI =231231 b. The budget constraint holds with equality because which assumption is satisfied? A. Completeness B. Transitivity C. Strong Monotonicity (more is better) D. Convexity (diminishing marginal rate of substitution)
