Question: Consider a consumer with utility function U ( x , y ) = 2 xy . Her income is I = 1 5 , and
Consider a consumer with utility function Ux yxy Her income is I and prices are given by px and py Address the following questions: a Find the demand functions. b Find the optimal bundle. c Find the price elasticity of good y Assume the price of good x increases up to px d Find the income effect, the substitution effect and the total effect. e Determine whether the good x is normal or inferior f Determine whether the good x is a Giffen good g Are goods x and y substitutes, complements, or independent goods?
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