Suppose a consumer s demand for good 1 is given by x 1 p 1 p 2 m m 2 p 1 p 2 and she spends all her income on these two goods a
Suppose a consumer s demand for good is given by x p p m m p p and she spends all
Suppose a consumer s demand for good is given by x p p m m p
for good is given by x p p m m p p and she spends all her income on these two goods a
Suppose a consumer s demand for good is given by x p p
m m p p and she spends all her income on these two goods a
Suppose a consumer s demand for good is given by
Suppose a consumer s demand
Suppose a consumer's demand for good 1 is given by x 1 ( p 1 ,p 2 ,m ) = m/ (2( p 1 + p 2 ), and she spends all her income on these two goods. (a)...

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Suppose a consumer's demand for good 1 is given by x1(p1,p2,m) = m/(2(p1 + p2), and she spends all her income on these two goods. (a) Find the consumer's demand for good 2. (Hint: use the budget equation.) Now, let the initial prices be p1 = 2 and p2 = 2, and let m = 48. Suppose the price of good 1 drops to (b) Is good 1 a normal good or inferior good? Ordinary or Giffen? Is good 2 a complement or substitute for good 1? (c) Are the consumer's preferences homothetic? (d) Calculate the change in the consumption of good 1 due to the income effect and substitution effect.

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