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4- Optimization Review Assume that a person's utility over two goods is given by: The price of In is equal to po and the price
4- Optimization Review Assume that a person's utility over two goods is given by: The price of In is equal to po and the price of x2 is equal to pa The total income of the agent is equal to M. Assume that a > 0 and / 2 0. (a) What is the budget constraint for this person? (b) Solve for the demand functions x], x; as functions of a A p, . P2, and M. (c) What are the own-price elasticities of demand for x, and x,? (d) What are the cross-price elasticities of demand for goods x, and ra? (e) Is this utility function equivalent to a Cobb-Douglas utility function? Why or why not
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