1 4. A consumer has preferences U = x2x, and demand functions y y X1 2p1 X2 2p2 Income is $100. a. How many units of each good does the consumer buy if the price of each good is $2? How much utility does the consumer get? b. How many units of each good does the consumer buy if the price of each x, is $1 and the price of x2 is still $2? c. What is the equation for the isoquant for these preferences? d. What is the price-consumption curve for this consumer? e. Substitute your answer from equation for the isoquant into the price-consumption curve so that you have a function for x2 as a function of both prices and the level of utility. f. The equation you obtained in part e tells you the optimal choice of x2 for a given set of prices and a given utility function. How much x, and x2 does the consumer buy if the price of each x, is $1 and the price of x2 is still $2 and utility is 25? g. Based on your answers to the previous problems what is the substitution of the price change you find in for the price change in part a and b? The income effect? This is for X1. h. Draw a diagram illustrating the substitution, income and total effect of the price change