Economics.?

Question

A consumer purchases two goods, food (F) and clothing ( C ). Her utility function is U(F,C) = FC + C; thus, MUf = C and MUc = F + 1. The price of food is Pf, the price of clothing is Pc, and the income of the consumer is I.

a. What is the equation of the demand curve for clothing?

b. what is the equation of the Engle curve for clothing?

c. Are food and clothing complementary or substitute goods?

Answer 1

a. C(*)= [ I + Pf ] / 2 Pc

b. I am guessing you are looking for income effect which is just the partial of C wrt to I

    d C / d I = 1 / 2Pc

c. comps