Alyson 's preferences are represented by the Cobb Douglas utility function U(X, Y) XYb Use formulas (4) and (5) from Chapter 4 MUX X 1 Yb MUY bX Yb 1 to answer the following questions What are her demands for X and Y as functions of her income M and the prices of X and Y, PX and PY What share of he...

Assume M is income P X is the price of X and P Y is the price of Y Demand for X as a function o ...

Alyson's preferences are represented by the Cobb-Douglas utility function U(X, Y) = XYb. Use formulas (4) and

Question:

Alyson's preferences are represented by the Cobb-Douglas utility function U(X, Y) = XαYb. Use formulas (4) and (5) from Chapter 4
MUX = αXα-1 Yb
MUY = bXα Yb-1
to answer the following questions. What are her demands for X and Y as functions of her income M and the prices of X and Y, PX and PY? What share of her budget does she spend on X? What share on Y? What is the elasticity of her demand for X with respect to PX? With respect to PY?