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4.The utility function is U ( x , y ) = x 2 y. a) Derive the Marshallian demand for x and y. b) Derive
4.The utility function is U(x, y) = x2y.
a) Derive the Marshallian demand for x and y.
b) Derive the Compensated demand for x and y.
c) What is the substitution effect of a price change in Px?
d) Suppose initially, the consumer has income I = 240 and faces prices Px= $8 and Py= $2. If the price of y increases to $8 and income is unchanged, what must the price of x fall in order for the consumer to be exactly as well off as before the change in Py?
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