Question: 1. A consumer has the utility function U ( x 1 , x 2 )= min {2x 1 ,x 2 } and an income of

1. A consumer has the utility function U ( x₁, x₂)= min {2x₁,x₂} and an income of $200. Initially, the price of good 1 is $6 and the price of good 2 is $2.

a) Find consumer's demand function for good 1.

b) Then, price of good 1 decreases to $ 4 and price of good 2 stays at $2. What is the total change in demand for good 1? Show the income and substitution effects of this price change both graphically and algebraically.

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