Question: Question [4]: Let us consider Leontief preferences with demand function r(p, wD) = Pi +2p2 PI+2p2 1. Verify Cournot aggregation. 2. Verify Engel aggregation. 3.

Question [4]: Let us consider Leontief preferences with demand function r(p, wD) = Pi +2p2 PI+2p2 1. Verify Cournot aggregation. 2. Verify Engel aggregation. 3. Suppose that the consumer has income of 20 and that the initial price vector is (pi. p2) = (2,2). Now let p, change to 1. Find the total impact on the demand for good 1, and break it down into an income effect and a substitution effect (use Slutsky compensation.)

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