Income on the horizontal axis and demand on vertical one

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Pete's utility function is u(x1, x2) = ? x1 + x2

Suppose the price of good 1 is $2, and the price of good 2 is $1. Derive Pete’s demand function for good 1 (as a function of income). Is good 1 normal for Pete? How about good 2? Plot the Engel curve for goods 1 and 2 (with income on the horizontal axis and demand on the vertical one).

Reference no: EM13739623

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