Question: Question 2 (5 marks) Justin has the utility function U = egg, with the marginal utilities WMUng = y and MU}; = x. The price

 Question 2 (5 marks) Justin has the utility function U =

egg, with the marginal utilities WMUng = y and MU}; = x.

Question 2 (5 marks) Justin has the utility function U = egg, with the marginal utilities WMUng = y and MU}; = x. The price of x is $2, the price of y is 1:33, and his income is 40. When he maximizes utility subject to his budget constraint, he purchases 5 units of y. (a) What must be the price of y and the amount of x consumed? (1 marks). {13) Prove that this allocation follows the equi-marginal principle (2 marks). (c) What would be the new bundles of X, y if 33 was $3 (2 marks)

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