(1) (19 points) Andy has an endowment of (w,,w,) = (20,8) and the following utility function u(z,y) = x'/3y23 The prices of the goods are as follows, p, = 4, p, = 5. {a) (1 point) What is Andy's income? (b) (2 points) What is Andy's optimal consumption of goods = and y7 (e} (1 point) Is Andy a net buyer or a net seller of good 7 (d) (1 point) The government implemented a tax, and so the price of x increased to 10 (py- = 10). What is the income of the agent after the price change? (e) (2 points). What is Andy's optimal consumption of goods x and y after the price change? (f) (2 points) Plot both budget lines and the optimal consumption you found in (b) and (e) {g) (1 point). Is Andy better off after the price change? (h) (9 points). Find the substitution, income, and endowment income effects (2) (19 points) Andy has an endowment of (w_,w,) = (20,10) and the following utility function u(x,y) = min{x,3y}. The prices of the goods are as follows, p, =12, p, = 4. {a) (1 point) What is Andy's income? (b) (2 points) What is Andy's optimal consumption of goods = and y7 {e) (1 point) Is Andy a net buyer or a net seller of good 7 (d) (1 point) The price of = dropped to 2 (pyr = 2). What is the income of the agent after the price change? (e) (2 points). What is Andy's optimal consumption of goods x and y after the price change? (f) (2 points) Plot both budget lines and the optimal consumption you found in (b) and (e) {g) (1 point). Is Andy better off after the price change? (h) (9 points). Find the substitution, income, and endowment income effects