Derive utility from two goods-housing and consumption goods

Reference no: EM13697653

Suppose that people derive utility from two goods---housing (H) and all other consumption goods(C).

a. Show a typical consumer's allocation of his or her income between H and C

b. Suppose that the government decides that the level of housing shown in part a(say, H*) is "substandard" and requires that all people buy H**>H* instead. Show that this las would reduce this person’s utility.

Reference no: EM13697653

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