Presume david spends his income i on two goods x and y, Ask an Expert

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Presume David spends his income (I) on two goods, x and y, whose market prices are px and py, respectively. His preferences are represented by the utility function u(x;y) = lnx + 2lny (MUx = 1=x;MUy = 2=y).

1. Derive his demand functions for x and y. Are they homogeneous in income and prices?

2. Assuming I = $60 and px = $1, graph his demand curve for y.

3. Repeat part (b) for the case in which px = $2.

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Microeconomics, Economics

Category:- Microeconomics
Reference No.:- M91226705

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