Suppose that an individual maximizes

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Suppose that an individual maximizes u(x,y)=x1^a x2^b (α, β > 0) subject to the budget constraint p1x1 + p2x2 = y. Solve for x1 and x2 (the optimal values of x1 and x2, which are the demands for x1 and x2)

A) Are x1 and x2 , normal or inferior?

B) Does demand for x1 and x2 , slope downward?

C) Is x2 a gross substitute or gross complement of x1B

Reference no: EM131001273

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