Consider the utility function u(x,y) = x+ lny

with budget constraint p_xx + p_yy = I.

Remark: You must consider the possibility of corner solutions in answering the following questions

Find the consumer's Marshallian demand functions for xand y.

1. Find the own-price elasticities, income elasticities, and cross-price elasticities for both xand y. Is it possible for xto be an inferior good? What about y?
2. Find the consumer's indirect utility function.

Answer rating: 100% (QA)

Answer To solve this problem we will use the utility function uxy x lny and the budget constraint px... View the full answer