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The preferences of a consumer are represented by the utility function U (x, y ) = xy 2 Recall that for this function the marginal
The preferences of a consumer are represented by the utility function U (x, y ) = xy2 Recall that for this function the marginal utilities are given by MUx (x, y) = y2 and MUy(x, y) = 2xy. Assume that the prices of the goods are px = py = 2.
(a) Find the equations for the Engel curves of goods x and y and graph them.
(b) Is good x normal or inferior? What about y? Explain.
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