Maria is a consumer with preferences over good x and good y represented Exercise 3 by the utility function u(x, y) = x²y. The price of good y in this market is py = $2. a) Derive Maria's demand functions of good x and good y. [Hint: Solve the UMP keeping Px and I undefined and using py = $2] b) Draw her demand curve of good x assuming she has an income of I = $240. c) On a separate graph, draw her Engel curve for good y. Is good y a normal good for Maria? Explain.

Maria is a consumer with preferences over good x and good y represented Exercise 3 by the utility function u(x, y) = x²y. The price of good y in this market is py = $2. a) Derive Maria's demand functions of good x and good y. [Hint: Solve the UMP keeping Px and I undefined and using py = $2] b) Draw her demand curve of good x assuming she has an income of I = $240. c) On a separate graph, draw her Engel curve for good y. Is good y a normal good for Maria? Explain.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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