Question: Maggie has preferences that are 'well behaved'. A utility function that represents her preferences is u(x, x) = + x3. Her income is m,

Maggie has preferences that are 'well behaved'. A utility function that represents her preferences is u(x, x) = + x3. Her income is m, the price of is P1 and the price of X2 is P2. (a) (10 marks) Explain how a consumer's Marshallian demand function dif- fers to their Hicksian demand function. (b) (5 marks) Derive and draw Maggie's Hicksian demand function for . (c) (5 marks) Derive and draw Maggie's Marshallian demand x. (d) (10 marks) Suppose Maggie is endowed with w = (2, 2) units of good 1 and good 2, and that prices are pi 1 and p2 2. Draw Maggie's net supply and demand curves. -

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