Question: A consumer has preferences over two goods represented by the utility function u(x,y) = ln(x) + .5y, an endowment e(x,y) = (ex, ey) and facing
A consumer has preferences over two goods represented by the utility function u(x,y) = ln(x) + .5y, an endowment e(x,y) = (ex, ey) and facing prices px, p.
-Assume e(x,y) = (10,10) and py = 1 (thus px represents the price of good x relative to good y). Solve for the demand for good x and good y, given price px. At what prices is the consumer a net demander of good x, at what prices is she a demander of good y, and at what prices would she choose not to trade.
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