2. Consumption and Subsidy Consider Rob has utility over two goods: x and and we can represent his utility as: u(z,c) = aln(z) + (1 a)in(c) Suppose he has income (y), and y = 12, the price of z is p, = 2 and the price of : p. =1 A) Maximize Rob's utility and solve for his demand for and in terms of , then calculate when o = 0.75 B) Now suppose the government subsidizes consumption of good z with a 50% proportional subsidy. Solve for Rob's demand for and under the subsidy C) Graph utility maximizing choice from part A) and then from part B) (put on the vertical axis) D) Calculate the income and substitution effects on Rob's consumption of z resulting from part B)