Chepa’s utility function is given by U (x, y) = ln x + 4 ln y.
Assume that Chepa has endowments (10, 10) and that Py = 10
throughout the problem. (h) This part of the question is to
investigate Chepa’s welfare under different prices. We will do it
step by step.
(i) By substituting out the M with the expression of Chepa’s
endowment income (see part (g)), obtain Chepa’s gross demands as
functions of Px.
(ii) Plug your answer...