The utility function of a consumer is U = X²Y, her income is M = 100€ and the prices of the goods are Px = 10€/u and Py = 10€/u. Obtain the income consumption curve and the Engel curve for good X. Calculate the income elasticity of X. What kind of good is X?

The utility function of a consumer is U = X²Y, her income is M = 100€ and the prices of the goods are Px = 10€/u and Py = 10€/u. Obtain the income consumption curve and the Engel curve for good X. Calculate the income elasticity of X. What kind of good is X?

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter6: Consumer Choices

Section: Chapter Questions

Problem 15CTQ: Income Effects depend on the income elasticity of demand for each good limit you buy. If one of the...

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Question

Exercise 8.1
The utility function of a consumer is U = X²Y, her income is M = 100€
and the prices of the goods are Px = 10€/u and Py = 10€/u. Obtain the
income consumption curve and the Engel curve for good X. Calculate the
income elasticity of X. What kind of good is X?

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