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If a consumer has a utility function u(x1, x2) = x1x42, what fraction of her income will she spend on good 2?

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter6: Consumer Choices

Section: Chapter Questions

Problem 15CTQ: Income Effects depend on the income elasticity of demand for each good limit you buy. If one of the...

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Question

5. If a consumer has a utility function u(x1, x2) = x1x42, what fraction of
her income will she spend on good 2?
6. For what kind of preferences will the consumer be just as well-off facing
a quantity tax as an income tax?

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