Question: Adam's utility function is U = A 2 B2 where A, B represent the number of apples and bananas respectively that he consumes. (a) Find


Adam's utility function is U = A \"2 B\"2 where A, B represent the number of apples and bananas respectively that he consumes. (a) Find Adam' s compensated demand functions. (b) Write down Adamr s ordinary demand functions (you don 't need to derive them). Suppose Adam' s income is $100 and the prices ofthe goods are pa =$2 and pb =$5. How much A and B would Adam buy? (c) Suppose pa rises to $5. How much A would Adam buy now? What if his income were compensated to keep his utility constant? By using your answers to these questions, plot the ordinary and demand curves for A on the same graph. ((1) Find the compensating and equivalent variations of this price change
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