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5.7. David has a quasi-linear utility function of the form U(x, y) = Vx + y, with associated marginal utility functions MUx = 1/(2vx) and
5.7. David has a quasi-linear utility function of the form U(x, y) = Vx + y, with associated marginal utility functions MUx = 1/(2vx) and MU, = 1. a) Derive David's demand curve for x as a function of the prices, Pr and P,. Verify that the demand for x is independent of the level of income at an interior optimum. b) Derive David's demand curve for y. Is y a normal good? What happens to the demand for y as Px increases
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