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A consumer purchases two goods, food and clothing. The utility function is U(x, y) = √xy, where x denotes the amount of food consumes and y the amount of clothing. The marginal utilities are MUX = √y/(2√x) and MUy=√x/(2√y). The price of food is Px, the price of clothing is Py, and income is I. a) Show the equation for the demand curve for food is x = 1/(2Px). b) Is food a normal good? Draw D₁, the consumer's demand curve for food when the level of income is I = RM120. Draw D₂ the demand curve when I = RM200.

A consumer purchases two goods, food and clothing. The utility function is U(x, y) = √xy, where x denotes the amount of food consumes and y the amount of clothing. The marginal utilities are MUX = √y/(2√x) and MUy=√x/(2√y). The price of food is Px, the price of clothing is Py, and income is I. a) Show the equation for the demand curve for food is x = 1/(2Px). b) Is food a normal good? Draw D₁, the consumer's demand curve for food when the level of income is I = RM120. Draw D₂ the demand curve when I = RM200.

Microeconomic Theory
Microeconomic Theory
12th Edition
ISBN:9781337517942
Author:NICHOLSON
Publisher:NICHOLSON
Chapter3: Preferences And Utility
Section: Chapter Questions
Problem 3.11P
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Question 1 A consumer purchases two goods, food and clothing. The utility function is U(x, y) = √xy. where x denotes the amount of food consumes and y the amount of clothing. The marginal utilities are MUX = √y/(2√x) and MUX=√x/(2√y). The price of food is Px, the price of clothing is Py, and income is I. a) Show the equation for the demand curve for food is x = 1/(2Px). b) Is food a normal good? Draw D₁, the consumer's demand curve for food when the level of income is I = RM120. Draw D₂ the demand curve when I = RM200.
Transcribed Image Text:Question 1 A consumer purchases two goods, food and clothing. The utility function is U(x, y) = √xy. where x denotes the amount of food consumes and y the amount of clothing. The marginal utilities are MUX = √y/(2√x) and MUX=√x/(2√y). The price of food is Px, the price of clothing is Py, and income is I. a) Show the equation for the demand curve for food is x = 1/(2Px). b) Is food a normal good? Draw D₁, the consumer's demand curve for food when the level of income is I = RM120. Draw D₂ the demand curve when I = RM200.
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