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$\begin{align} u(x_1x_2) & = -a\ln{a\over (a+b)x_1} -b\ln {b\over (a+b)x_2} \\ & = a\ln x_1 + b\ln x_2 + \text{constant}. \end{align}$

Could somebody please explain how this is simplified? I'm confused with the steps needed to give us these signs.

(Image of original formula as supplied by OP)

2 Answers 2

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$u(x_1,x_2) = -a(\ln a - \ln(a+b)x_1) - b(\ln b - \ln(a+b)x_2) =$

$ =-a\ln a + a\ln(a+b)x_1 -b\ln b + b\ln(a+b)x_2 =$

$= -a\ln a -b\ln b + a\ln(a+b) +a\ln x_1 +b\ln(a+b) + b\ln x_2 = b\ln x_1 + b\ln x_2 + C$

where

$C = -a\ln a -b\ln b + (a+b)\ln(a+b)$

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    Im sorry. forgot about this! Thanks2012-10-15
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Recall the following identities $\ln(pq) = \ln(p) + \ln(q)$ $\ln \left( \dfrac1q \right) = - \ln(q)$ $\ln \left( \dfrac{p}{q} \right) = \ln(p) - \ln(q)$ Make use of the above identities to get your answer.