Consider a typical resident of Berkeley. The Hicksian and Marshallian demand curves for milk are likely to be almost identical for this typical Berkeley consumer, but are likely to be quite different for housing.
Suppose a consumer drives utility from goods x1,x2, and x3 with corresponding prices p1,p2, and p3 according to the utility function.
U(x1,x2,x3) = log(x1-10) + log(x2) + log(x3)
a) Find the marshallian demands for x1,x2, and x3 in terms of income Y and prices p1,p2, and p3
b) Let the prices p1=2, p2=1, p3=1, and Y=100. Find the utility-maximizing values for x1,x2, and x3.