Suppose Michelle makes a trip to a candy store where she intends to purchase two goods: gummy worms (g) and donkeys (d). Her utility function is U = gd.
(a) Suppose the price of gummy worms is 2 and she has $200 in income. Derive an expression for her demand curve for donkeys.
(b) Suppose the price of gummy worms is 2 and the price of donkeys is 100. Derive an expression for her Engel curve for donkeys.
(c) Use your answer from (b) to derive her income elasticity of demand for donkeys when her income is $200.