Assume that the preferences of a consumer can be expressed by the utility function : u(x₁,x₂) = 4x₁^0.75+ x₂

(i) Show that based on this utility function, the demand functions are for

the benefits provided by

x*₁= 81p₂⁴/p₁⁴and x^*₂= m/p₂- 81p₂³/p₁³

where P1 is the price per unit 1 x, P2 is the price per unit 2 x and m is the income of

the consumer.

(ii) Explain what is meant by the cross-price elasticity of a good. Calculate

the cross-price elasticity of the good X1 stated in question (i), and give an interpretation of

the result.