The average California homeowner has a demand function for energy, x1. in kWh {kilo- watt hours}. $1=B+-~ 1. 13:31 2P where x; is water 5: sewer usage, per LOUD gallons. 1. {a} Energy is a normal good, but is it a luxury or necessary good? Explain. 2. [o] Are energy and water 51 sewer complements or substitutes? Explain. 3. [c] The current price of energy is $0.1: per kWh II= p1}. and the current rate of water 5: sewer is $20 per LUBE\": gallons [= pill. The ayerage homeowner has an income of $4, {= m]. Energy prices are announced to increase to $111.20 per kWh. Calculate the income and substitution effects. Interpret these effects