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Assume a consumer buys two goods: basketballs (x) and footballs (y). The price of a basketball is $px, the price of a football is $py,
Assume a consumer buys two goods: basketballs (x) and footballs (y). The price of a basketball is $px, the price of a football is $py, the consumer has $M to spend, and his utility will be given by U(x, y) = 2x^ 2/3 + y^2/3 . Answer the following:
1. Derive the expression for MUx, MUy, and the MRS.
2. Next, derive the expression for demand for buying basketballs in terms of the prices and income. In other words, derive the function Dx(px, py, M).
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