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3_ Henois: has preferences over goods I and y that can be represented by the utility function function Uh, y) = x - {y +

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3_ Henois: has preferences over goods I and y that can be represented by the utility function function Uh, y) = x - {y + 2). His income is $412} and the prices of the two goods are respectively.r *px = $14!}, = $2. a} Obtain Henok's optimal consumption of goods I and y. Are the goods normal or inten'or? Are the goods luxury goods? b} NOW suppose that the price of good 3: goes up to $4. Compute the new demand for good 3;, and quantify the substitution and income effects on the consumption of good 3

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