Given a utility function: U(q1,q2)=q1 +βlnq2 where q1 and q2 is the consumption of good 1...

Given a utility function:

U(q1,q2)=q1 +βlnq2
where q1 and q2 is the consumption of good 1 and good 2 respectively, β is a positive constant,

and the budget constraint:

p1q1 + p2q2 = Y

where p1 and p2 are prices of good 1 and good 2 respectively, Y is the consumer’s income

a. Holding p2 and Y fixed, find the demand function for good 2.
b. Holding p1 and p2 fixed, find the functional form of the Engel curve for good 2.

Solutions

Expert Solution

Rahul Sunny answered 1 year ago

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