In the first part of the course we derived the demand curve for an individual whose preferences can be described by the Cobb-Douglas utility function U = 4????1 .5????2 .5 . Answer the following questions assuming all individuals in a market have these identical preferences and identical income of M.
a. Write the equation for an individual's demand for good 1.
b. Write the equation for market demand assuming there are N individuals in this market.
c. The total expenditures of all consumers in this market for good 1 is market demand multiplied by price. Using your answer in part b, show that total revenues are constant in this market.