Question: Question 1 A consumer has preferences over two goods, q, and 92, given by: u(91, 42) = 300 In(91) + 92- Suppose the price of

Question 1 A consumer has preferences over two goods, q, and

Question 1 A consumer has preferences over two goods, q, and 92, given by: u(91, 42) = 300 In(91) + 92- Suppose the price of good 1 is pi, the price of good 2 is 1 and the consumer's total h (a) Draw the consumer's indifferences curves. (2.5 marks] (b) Do the consumer's preferences satisfy weak convexity? What about strict convo (c) What are the consumer's Marshallian demand functions for each good? When th high income, do you notice anything unusual about the demand for good 17 5 (d) Solve for the consumer's Hicksian demand functions. How do these compare with demands? Do you notice anything unusual about the demand for good 1? (5 m (e) Suppose m = 400 and initially p1 = 3. Compute consumer's consumer surplus a fall in price of good 1 to 1. How does this compare to their compensating variation associated with the price change? (7.5 marks]

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