Mr Macleod likes to drink wine. He has the option to consume two different products, 1 liter of;red wine (X) or 1.6 liters of white wine (Y). X and Y are perfect substitutes. Each liter of wine;gives Mr Macleod 1 unit of utility.;a) Write Mr Macleod utility function.;b) Suppose that Px=5. Calculate the Marshallian demand for Y. Draw a graph for this demand;(Y as function of Py).;c) Now suppose that initially Px=5 and Py=10. But then the price of y changes to $7. Calculate;the total change in demand for y. Explain your result.
Paper#29313 | Written in 18-Jul-2015Price : $27