Suppose that the number of goods is 2, that is, L = 2, and that the utility function is

(1) u(a:1,x2) : x/lexg. Carefully and neatly graph the indifference curves through the con sumption bundles (1, 1) and (2, 2). Do these indifference curves ever hit the axes? If so, at what points? If not, explain why you know that they do not. If the indifference curve does hit the xlaxis What is the slope of the indifference curve at that point? (10 marks) Set up the utility maximisation problem for a consumer with wealth w who faces prices p1 and p2 for goods 1 and 27 give the Lagrangian function for that problem7 nd the rst order conditions and solve them to give the Marshallian demand functions and the equilibrium value of the Lagrangian multiplier. (20 marks) Find the indirect utility function7 that is the maximum utility that can be achieved as a function of (pbpg, w) (10 marks)