1. Consider a consumer with the following utility function and budget line, respectively: U(X,Y) = 0.3log(X)...

 

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1. Consider a consumer with the following utility function and budget line, respectively: U(X,Y) = 0.3log(X) + 0.7log(Y) Px * X+Py * Y = I, where Px and Py are the prices of X and Y, respectively, and I is the consumer's income. (a) Derive the demand functions for X and Y. (b) Are X and Y normal or inferior goods? Explain. (c) Do both demand functions downward sloping? Explain. 1. Consider a consumer with the following utility function and budget line, respectively: U(X,Y) = 0.3log(X) + 0.7log(Y) Px * X+Py * Y = I, where Px and Py are the prices of X and Y, respectively, and I is the consumer's income. (a) Derive the demand functions for X and Y. (b) Are X and Y normal or inferior goods? Explain. (c) Do both demand functions downward sloping? Explain.