Jimmy’s preferences can be represented by the following utility function U = 2x + y. WealsohavePx =3,Py =3andW=100.
A) What is Jimmy’s optimal consumption bundle?
B) Show on a graph what happens to Jimmy’s consumption bundle when he receives a cash transfer of $100.
C) Is good x a normal good or an inferior good?
D) Calculate Jimmy’s income elasticity of demand for good x.