Question: 3. Consider the following utility functions: (i) U = mm[:1;,y] and (ii) Lexicographic preference. Decompose the total price effect into substition effect and income effect.

3. Consider the following utility functions: (i) U = mm[:1;,y] and (ii) Lexicographic preference. Decompose the total price effect into substition effect and income effect. Use both Hicksian and Slutsky decomposition. Identify substitution effect and income effect in your diagrams. (20 points)

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