Question: 3. Suppose Anne's utility function for food (X) and clothing (Y) is given by U + Yand Anne had budget constraint I = PxX

3. Suppose Anne's utility function for food (X) and clothing (Y) is given by U + Yand Anne had budget constraint I = PxX 4 PyY. a. Find Anne's optimal bundle if Px = 4 and Py=4 and Anne has 1=60. b. Discuss how the demand for X depends on her income. c. Suppose now that the price of X increases to 8. Find the SE and IE ofthe price change.

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