Barbara’s utility for 2 goods X and Y is given by U(x, y) = x^0.6y^0.4. Let I denote income and px and py denote the prices of good X and Y respectively.
a) Show (using either the substitution method or the Lagrange method) that Barbara’s Marshallian demand curve for good X is given by x = 0.6(I/px) and for good Y is y = 0.4I/py.
b) Graph the Marshallian demand curve for good X given I and py.
c) What is Barbara’s gain in consumer surplus if price of good X decreases from $20 to $15