Assume two normal goods The consumer faces p 1 1 and p 2 1, m 20 and consumes 10 units of each good Suppose that the consumption of this optimal basket gives a utility of 100 (U 100) a) Find D 1 (p 1 , p 2 ,m), D 2 (p 1 , p 2 ,m), H 1 (p 1 , p 2 ,U), H 2 (p 1 , p 2 ,U) and E(p 1 , p 1 ,U) b) Suppose that the price of good 1 increases by $1 (p 1 2)and The consumer buys now 4 units of good 1 and 12 units of good 2 and the new basket gives him a utility of 80 (U 80) Find D 1 (p 1 , p 2 ,m), D 2 (p 1 , p 2 ,m), H 1 (p 1 , p 2 ,U) and H 2 (p 1 , p 2 ,U)

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Question: Assume two normal goods. The consumer faces p 1 = 1 and p 2 = 1, m = 20 and consumes 10 units of each

Assume two normal goods. The consumer faces p₁ = 1 and p₂ = 1, m = 20 and consumes 10 units of each good. Suppose that the consumption of this optimal basket gives a utility of 100 (U = 100). a) Find D₁(p₁, p₂,m), D₂(p₁, p₂,m), H₁(p₁, p2,U), H₂(p₁, p₂,U) and E(p₁, p₁,U). b) Suppose that the price of good 1 increases by $1 (p₁ = 2)and The consumer buys now 4 units of good 1 and 12 units of good 2. and the new basket gives him a utility of 80 (U = 80). Find D₁(p₁, p₂,m), D₂(p₁, p₂,m), H₁(p₁, p₂,U) and H₂(p1, p₂,U).

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