6.5 How might one deine a composite commodity for the pensioner’s solid food consumption?

State the pensioner’s optimisation problem as one of choosing between solid (s) and liquid (l)

food consumption.

What is the pensioner’s demand functions for s and l ?

Once the pensioner decides how much to spend on s, how will she allocate those expenditures between bread and tuna?

In general, uncompensated cross-price effects are not equal. That is,

�xi

�pj

≠

�xj

�pi

.

Use the Slutsky equation to show that these effects are equal if the individual spends a constant fraction of income on each good regardless of relative prices.
(This is a generalisation of Problem 6.1.)