Y6

Question 2 Harry spends his weekly income M > 0 on two commodities, food (X) and rental videos (Y). His utility function is U(X,Y):2-x/7(+2-x/17 The price of food is PX > 0 and the price of rental videos is Py > 0. (a) Compute Harry's demand functions for food and rental videos. (10 Marks) (b) Suppose the prices are PX = 2 for food and FY = 1 for rental videos. Compute Harry's Engel curves for food and rental videos. (1 0 Marks) (C) Is any of the two goods, food or rental videos, an inferior good for Harry? (10 Marks)