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Assume that a person's utility over two goods is given by
U(x1,x2)=(x1 -5)1/3(x2 -10)2/3
The price of good x1 is equal to p1 and the price of good x2 is p2. The total income of the individual is given by I.
(a) Write down the budget constraint of this consumer
(b) Calculate the demand for each one of the two goods
(c) Is good x1 a normal or an inferior good? What about good x2? Make sure to justify your answers.
(d) Calculate the elasticity of demand for each one of the two goods.
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i. If a stock is selected at random out of the analyst's list of 246 stocks, what is the probability that it increased in price?
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