Question

Consider a consumer who consumes two goods and has utility function u(x1,x2)=x2 +√x1. The price of...

Consider a consumer who consumes two goods and has utility function

u(x1,x2)=x2 +√x1.
The price of good 2 is 1, the price of good 1 is p, and income is m.

(1) Show that a) both goods are normal, b) good 1 is an ordinary good, c) good 2 is a gross substitute for good 1.

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Answer #1


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