Y 100-x Mr. Kat, a resident of Meowville, can consume electricity (x) and natural gas (y)....

 

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Y 100-x Mr. Kat, a resident of Meowville, can consume electricity (x) and natural gas (y). His utility function is U (x, y) Suppose that the price of electricity is på, the price of natural gas is py, and Mr. Kat's income is m. Also, suppose that Px > Py. A. Find Mr. Kat's marginal rate of substitution (MRS) and construct the two conditions for ordinary demand in rational constrained choice from the given information. B. Are electricity and natural gas substitutes, complements, or discrete goods (i.e., no relation with each other) for Mr. Kat? What is the reason for your answer? C. Find Mr. Kat's ordinary demand for electricity and natural gas, (x*, y*), in terms of Pa, Py, and m. Y 100-x Mr. Kat, a resident of Meowville, can consume electricity (x) and natural gas (y). His utility function is U (x, y) Suppose that the price of electricity is på, the price of natural gas is py, and Mr. Kat's income is m. Also, suppose that Px > Py. A. Find Mr. Kat's marginal rate of substitution (MRS) and construct the two conditions for ordinary demand in rational constrained choice from the given information. B. Are electricity and natural gas substitutes, complements, or discrete goods (i.e., no relation with each other) for Mr. Kat? What is the reason for your answer? C. Find Mr. Kat's ordinary demand for electricity and natural gas, (x*, y*), in terms of Pa, Py, and m.

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