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Consider a consumer with Cobb-Douglas preferences over two goods, x and y described by the utility...

Consider a consumer with Cobb-Douglas preferences over two goods, x and y described by the utility function u(x, y) = 1/3ln(x) + 2/3n(y) 1. Assume the prices of the two goods are initially both $10, and her income is $1000. Obtain the consumer’s demands for x and y.

2. If the price of good x increases to $20, what is the impact on her demand for good x?

3. Decompose this change into the substitution effect, and the income effect. How big is each?

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