What is bridgit demand for beer and stamps

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Bridgit's utility function is U(x1, x2)= x1 + ln x2 x1 - stamps x2 - beer Bridgit's budget p1 x1 + p2 x2 = m

p1 - price of stamps

p2 - price of beer

m - Bridgit's budget

a) What is Bridgit's demand for beer and stamps?

b) Is it true that Bridgit would spend every dollar in additional income on stamps?

c) What happens to demand when Bridgit's income changes (i.e. find the income elasticity)? d) What happens to demand when p1 and p2 increase (i.e. find the price elasticities)?

Reference no: EM132500122

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