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Sarah's preferences are represented by U(x;y)= x^2y^3. Her income is $1,000, the price of x is $5, and the price of y is $20. If
Sarah's preferences are represented by U(x;y)= x^2y^3. Her income is $1,000, the price ofxis $5, and the price ofyis $20. If
the price ofxfalls to $4, calculate the (a) slutsky substitution (b) Income and (c) total effect of the price decrease on the
demand of x. Set up the Lagrange to find all the demands.
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