Question: (20 points) Consider a consumer's problem where there are two commodities 1 and 2. Recall that if the demand functions come from the utility

and 2. Recall that if the demand functions come from the utility

maximization problem, then: They must be homogeneous of degree O. That is,

x(tP1, tp.2, tm) = m) They must satisfy the budget constraint: In

(20 points) Consider a consumer's problem where there are two commodities 1 and 2. Recall that if the demand functions come from the utility maximization problem, then: They must be homogeneous of degree O. That is, x(tP1, tp.2, tm) = m) They must satisfy the budget constraint: In addition assume (The Slutsky Symmetry): i.e., O:r2 OPI Dm OP2 0m Moreover , Ohi

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