Question: A consumer buys two goods, good X and a composite good Y. The utility function is given as ????(????,????)=????+???????? . 1) Derive the demand function

A consumer buys two goods, good X and a composite good Y. The utility function is given as ????(????,????)=????+???????? .

1) Derive the demand function for good X.(5 marks)

2) Is good X a normal or an inferior good? Why? ( 5 marks)

3) Suppose that initially ???? = $1 and then it falls and becomes ???? = $0.5. Also suppose that Income=$10. ????????

Calculate the substitution effect, income effect, and the price effect and show you answer graphically (10 marks)

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