1. Assume that a consumer needs to choose how much to consume of x and of y. Assume that her utility function is given by U(x,y)=x+y1/2Assume that theprice of x is normalized to 1 and that of y is 2. Assume the consumer has 200 units of budget.

a. What is the optimal consumption?(5 marks)

b. What is the new consumption if theprice of y doubles?(5 marks)

c. Can you decompose the change from one optimum to another into an income and substitution effect?(10 marks)