Question: 4. Juana has utility function u(:r;1,:r:2) = :31 + 1113522. The price of good 1 is 331 > 0, the price of good 2 is

4. Juana has utility function u(:r;1,:r:2) = :31 + 1113522. The price of good 1 is 331 > 0, the price of good 2 is 102 > 0, and Juana's income is I .Assume that I > p1. (a) Calculate Juan's demand functions 1:} and 1:3 by solving her utility max imization problem (b) Are good 1 and good 2 inferior or normal goods? (0) Calculate the price elasticity of Juana's demand for good 1. ((1) Suppose that initially P1 = 1, pg = 5 and I = 10. The price of good 2 changes to 10% = 10. Calculate the income effect, the substitution effect and the total effect on the demand for good 2

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