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for the demand curve= (1-.7)Y/(pz) px=2 and pz=3 find the engel curve for z, provide the...

for the demand curve= (1-.7)Y/(pz) px=2 and pz=3

find the engel curve for z, provide the formula and graph it.

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Answer #1

We are given that the demand curve for z is given by z = (1-.7)Y/(pz). For a price of pz = 3, the demand function is

z = 0.3Y/3 = Y/10

For an income of 100, z is 10 units. For an income of 200, z is 20 units and so on. Hence the engel curve is a straight line originating from origin.

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