Question 1 Consumer surplus for an individual is the...

Question 1 Consumer surplus for an individual is the difference between: The marginal benefit of consuming a good, and the price of the good. The price of the good, and the marginal cost of producing the good. The marginal cost of consuming a good, and the price of the good.

Marginal Utility Goods 1 and 2 are available at dollar prices of $p_{1}$ per unit of Good 1 and $p_{2}$ per unit of Good $2 .$ A utility function $U\left(x_{1}, x_{2}\right)$ is a function representing the utility or benefit of consuming $x_{j}$ units of good $j .$ The marginal utility of the $j$ th good is $\partial U / \partial x_{j}$ the rate of increase in utility per unit increase in the jth good. Prove the following law of economics: Given a budget of $L$ dollars, utility is maximized at the consumption level $(a, b)$ where the ratio of marginal utility is equal to the ratio of prices: $$\frac{\text { Marginal utility of Good } 1}{\text { Marginal utility of Good } 2}=\frac{U_{x_{1}}(a, b)}{U_{x_{2}}(a, b)}=\frac{p_{1}}{p_{2}}$$

DIFFERENTIATION IN SEVERAL VARIABLES

Lagrange Multipliers: Optimizing with a Constraint

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Question 1 Consumer surplus for an individual is the difference between: The marginal benefit of consuming a good, and the price of the good. The price of the good, and the marginal cost of producing the good. The marginal cost of consuming a good, and the price of the good.

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