1.McDonald’s Restaurant sells two goods: hamburgers and French fries. Suppose that McDonald’s increases the price of its French fries from $2 to $4 and the quantity demanded of McDonald’s hamburgers increases from 1500 units to 2000 units. Calculate the cross price elasticity of demand for McDonald’s hamburgers when compared to McDonald’s French fries. What type of relationship exists between McDonald's hamburgers and McDonald's French fries?
2. Suppose someone's utility function takes the form: U = XY Also suppose that this person has an income (I) of $100, and the price of good X is $5 and the price of good Y is $10. A. How would you algebraically describe this person's budget constraint? B. If this person wanted to maximize their utility, how much of good X and Y would they buy subject to their budget constraint?