In: Economics

# consider a representative consumer with the utility function ?(?, ?) = ?? + ? and the...

consider a representative consumer with the utility function ?(?, ?) = ?? + ? and the budget constraint ??? + ??? ≤ ?. Assume throughout that all prices and quantities are positive and infinitely divisible.

Assume initially that ?? = ?? = 1 and ? = 10.  Derive the consumers equilibrium cross-price elasticity between goods ? and ? and evaluate the value of this elasticity at the initial parameter values given .

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