Assignment:
Consider the utility function and budget constrait given by:
U(x1,x2,x3) = x1 + min {x2,x3}
x1p1 + x2p2 + x3p3 = w
Find the demand functions for x1, x2, x3. Justify your answer.
Here are some hints to help you solve this problem.
(i) You can't use the tangency condiition (marginal rate of substitution equals marginal rate of transformation) to find the optimal bundle here.
(ii) You might Think of x2 and x3 as one good.
(iii) The demand function are going to be conditional on the relative prices of the goods. If this, then that."