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Blackbeard's demand functions for grog, 1 , and bread, 2 , are ( if his income and the goods' prices are such that he buys
Blackbeard's demand functions for grog, 1 , and bread, 2 , are ( if his income and the goods' prices are such that he buys positive quantities of both goods ) : 1 * * = 1 2 2 1 and 2 * * = - 1 - 2 2 2 ( Aside: As an exercise, you can show that these are indeed the demand functions if Blackbeard's utility function is: { : ( 1 , 2 ) = ( 1 - 1 ) ( 2 1 ) . ) Given Blackbeard's demand functions, which of the following statements are correct? ( Note: Multiple answers may be correct. ) If the price of bread, 2 , rises high enough ( and nothing else changes ) , Blackbeard will stop buying bread, 2 , completely. If the price of grog, 1 , rises high enough ( and nothing else changes ) , Blackbeard will stop buying grog, 1 , completely. If the price of grog, 1 , rises high enough ( and nothing else changes ) , Blackbeard will
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