PART A You must answer the question in this section. A.1 Individuals in a market each have a total budget y to spend on two goods q1 and q2 at the prices pi and p2 respectively. Their preferences are described by the utility function SBại - Bq1 (A – 42)² , if q2 < A; u (q1, 42) (1) Bq1, if q2 > A; where A, B >0 are preference parameters. (a) Show that the quantity demanded of good 2 is if P2 Pi Bp2 P2 f2 (y, P1, P2) A – B, if - E Bp2 P1 0, if < < P2. VI

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