Preferences are represented by the utility function

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Suppose David spends his income (I) on two goods, x and y, whose market prices are px and py, respectively. His preferences are represented by the utility function u x y x y ( , ) ln 2ln = + (MUx=1/x, MUy=2/y).

a. Derive his demand functions for x and y.

b. Assuming px = $1 and py = $2, graph his Engel curve for x.

c. Assuming I = $60 and px = $1, graph his demand curve for y.

d. On the same graph repeat part c for the case in which px = $2.

Reference no: EM131003111

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