1. Suppose that consumer's preferences are represented by the utility function

U (x_{1 ,} x₂) = x₁^0.5 x₂^0.5 . The prices of the two goods are given by p₁ and p₂ and income is equal

to y . Using the fact that u* = v (p,y) , verify the Slutsky equation for the change in

the demand for good i when the price of good i changes: