Suppose Mr. Macleod Likes To Consume Wine. He Has The Option To Consume Two Different Products

Suppose Mr. Macleod likes to consume 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 ofutility.(a) Write down Mr. Macleod utility function.(b) Consider px = 5, I = 10. Calculate the marshallian demand for y. Draw a graph for this demand (y as function of py). Are the goods gross substitutes?(c) Consider px = 5, py = 10 and I = 10. Suppose the price of y changes to$3. Calculate the total change in demands. Explain your results.

Originally posted 2018-07-22 16:53:17. Republished by Blog Post Promoter