The utility function is given by u(x₁, x2) = 2x a) For this utility derive the demand func b) Set 1=60 and p2 = 2. Draw the demand c) Is good 1 normal or inferior good? Exp

Microeconomic Theory
12th Edition
ISBN:9781337517942
Author:NICHOLSON
Publisher:NICHOLSON
Chapter6: Demand Relationships Among Goods
Section: Chapter Questions
Problem 6.8P
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The utility function is given by u(x1, x2) = 2x1 + x2.
a) For this utility derive the demand functions x₁ (P₁, P2, 1) and x₂ (P₁, P2, 1).
b) Set 1-60 and p2 = 2. Draw the demand curve for good 1.
c) Is good 1 normal or inferior good? Explain.
Transcribed Image Text:The utility function is given by u(x1, x2) = 2x1 + x2. a) For this utility derive the demand functions x₁ (P₁, P2, 1) and x₂ (P₁, P2, 1). b) Set 1-60 and p2 = 2. Draw the demand curve for good 1. c) Is good 1 normal or inferior good? Explain.
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