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Ann lives in a two-good world. Her preferences are represented by the utility function u(x1, X2) = (x1)2 + 2x1X2+ (X2)2, where x1 denotes her
Ann lives in a two-good world. Her preferences are represented by the utility function u(x1, X2) = (x1)2 + 2x1X2+ (X2)2, where x1 denotes her consumption of good 1 and X2 denotes her consumption of good 2. Ann's income is m > 0, p1 denotes the unit price of good 1, and p2 denotes the unit price of good 2. (a) Draw a few of Ann's indifference curves. (b) Derive Ann's demand for good 1 as a function of m, p1, and p2
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