Instructions. The first question is theoretical question, and the second is an empirical question. They test your understanding of demand in different ways. Be sure to think quite a bit about both questions. Remember theory requires you to optimize, while you will need to calculate elasticities for the empirical question. Remember to PDF your submission before uploading. 1. Maurice has the utility function u(s, ) = a . Ins + t, while Mindy has the utility function u(s, t) = b . Ins+t. Describe the aggregate demand functions for s and t. Explain how the aggregate demand functions depend on the incomes of Maurice and Mindy, and calculate the price elasticities of demand for the aggregate demand functions. 2. Consider the following table showing how different income groups spent their money ! The figures in the table represent the total percent of expenditure spent on each expenditure cate- gory. The final line tells us what each group's average income is. A B C D E Food Prepared at Home 26 22 21 19 13 Food Away From Home 3.8 4.7 4.1 5.2 6.1 Housing 35 30 29.2 27.6 29.6 Clothing 6.7 9 9.8 11.2 12.3 Transportation 7.8 14 16.0 16.5 14.4 Total Income 1781 3636 5172 7415 14208 Use the data above to write a 200-300 word description of consumer behaviour. Use what you know about income elasticities and the different categories of goods to help you. Draw Engel curves for the two categories of food. Hint: elasticities might be different at different levels of income