Problem
Suppose David spends his income (I) on two goods, X and Y, whose market prices are PX and PY respectively. His preferences are represented by the utility function
U(X, Y) = ln X + 2ln Y
A) Write down his budget constraint. Hint: in this problem, since value of PX, PY and I are not given, you should keep PX , PY and I in your answer.
B) Derive his demand functions for X and Y. Hint: MRS=MUX/MUY and MUX=1/X, MUY=2/Y. Demand for X or Y equals the utility maximization consumption level of X or Y, which is a function of I, PX, and PY.
c) Assuming I = $60 and PX = $1, graph his demand curve for Y.
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.