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Question on utility function

 Assume a consumer with the given utility function: U = 3y1y2 + 5.

  1. Suppose y2 = 1, derive the marginal utility schedule for y1. In what direction is it moving?
  2. Obtain indifference curves for U = 23 and for U = 59.
  3. Suppose money income = $18.00, p1 = $6.00, and p2 = $2.00, determine the consumer equilibrium position by using the above indifference curves.
  4. Suppose money income = $18.00, p1 = $2.00, and p2 = $2.00, determine the consumer equilibrium position by using the above indifference curves.
  5. Employing the results of (3) and (4):                                                                                                                                                             
    • How much was the rise in demand for good 1 caused by the substitution effect? How much was caused by the income effect?
    • Draw the consumer demand curve for good 1
    • Find out whether goods 1 and 2 are substitutes, complements, or independents.
    • Derive the price elasticity of demand and define whether it is elastic, inelastic, or unitary elastic.
    • Suppose that money income rise from $18.00 to $30.00 while prices remain constant at p1 = $6.00 and  p2 = $2.00. Determine the new consumer equilibrium position. By using the results just obtained, classify goods 1 and 2 according to whether they are superior, normal, or inferior goods.

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