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1. Answer all parts (a) to (c) of this question. A consumer has an income of m available for expenditure on two goods. The price
1. Answer all parts (a) to (c) of this question. A consumer has an income of m available for expenditure on two goods. The price of good I is p and the price of good 2 is one. If he consumes x 2 0 units of good 1 and y 2 0 units of good 2, his utility is: u(z, y) = 1+ a" (y+ 1), where a E (0, 1) and B e (0, 1). We also assume that m > a/B. (a) [5 marks] Derive the consumer's marginal rate of substitution (MRS), between r and y
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