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Marshallian demand functions scale

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Reference no: EM13859611

Problem: Consider the utility maximization problem subject to a budget constraint with the following utility function: U(x, y) = 8x0.5y1.5 and the associated MRS is y/3x. Assume that Px is the price of x, Py is the price of Y and I is the consumer's income.

(a) Are the Marshallian demand functions scale invariant (i.e. homogeneous of degree zero)?

(b) Are the goods Giffen?

(c) Show why or why not the goods are inferior or normal.

Reference no: EM13859611

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