Question: Question 2: Consider an individual making choices over two goods, a and y with prices py and py, with income I , and the utility

Question 2: Consider an individual making choices over two goods, a and y with prices py and py, with income I , and the utility function u(x, y) = 2xy. (a) Find the (Marshallian) demand for . Does the law of demand hold? Show your work. (b) Find the indirect utility function and expenditure function. Show your work. (c) Find the compensated (Hicksian) demand for x. Show your work. (d) For a Cobb-Douglas type indifference curve over two normal goods and an increase in the price of the good, Stevie argues that compensating variation is larger than the change in consumer surplus, while Katy says the change in consumer surplus is larger. Who is right - Stevie or Katy? Explain

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