Question: Arnav has the utility function: u(x, y) = (x + 40)(y + 60). This utility function has nice negativelysloped and convex indifference curves increasing northeasterly.

Arnav has the utility function: u(x, y) = (x + 40)(y + 60). This utility function has nice negativelysloped and convex indifference curves increasing northeasterly. Arnav faces fixed prices px > 0 and py > 0, and has a limited income m > 0.

a. Find Arnav's Marshallian demand functions, x(px, py, m) and y(px, py, M). Show your work.

b. If the price of X is $10 and the price of Y is $12, how much X will Arnav buy when his income is $260?

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