Suppose the utility function for goods x and y is given by:

U(x; y) = xy + y

a) Calculate the uncompensated (Marshallian) demand functions for

x andy and describe how the demand curves for x and y are

shifted by changes in I or the price of the other good.

b) Calculate the expenditure function for goods x and y.

c) Use the expenditure function calculated in part b) to compute

the compensated demand functions for goods x and y . Describe

how the compensated demand curves for x and y are shifted by

changes in income or by changes in the price of the other good.

U(x; y) = xy + y

a) Calculate the uncompensated (Marshallian) demand functions for

x andy and describe how the demand curves for x and y are

shifted by changes in I or the price of the other good.

b) Calculate the expenditure function for goods x and y.

c) Use the expenditure function calculated in part b) to compute

the compensated demand functions for goods x and y . Describe

how the compensated demand curves for x and y are shifted by

changes in income or by changes in the price of the other good.

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