Question: Aim: To derive the demand curve using algebra o Let income M be equal to R20 o Assume 2 goods X and Y with prices

Aim: To derive the demand curve using algebra

o Let income M be equal to R20

o Assume 2 goods X and Y with prices Px and Py o Let Px = 2 and Py = 5

o Utility over the 2 goods (U) is: U=X*Y

o Exercise to do: Using this information, derive the demand for good X

o Hint: (Maximise Utility subject to budget constraint and use solution to recover the demands!)

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