What is the optimal consumption bundle for this consumer

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Consider a consumer who consumes two goods, x and y. He has Cobb-Douglasutility function given by U(x, y) = xy. Let the income of the consumer be 100.dollars. Price of x is $5 per unit and price of y is $10 per unit.MRS = y

1. What is the optimal consumption bundle (x, y) for this consumer?

2. Now let the price of x increases and becomes $ 10. What is the change indemand for x for this consumer?

3. How much of this change is due to the substitution e?ect?4. How much is due to income e?ect?

Reference no: EM131169299

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