Sally consumes two goods, X and Y. Her utility function is given by the expression
U(X,Y)= X^0.4Y^0.6. The current market price of X is $20 per unit, while the market price of Y is $100 per unit. Sally's current income is $10,000.
a)Calculate Sally's demand for X as a function of prices and incomes. Is good X normal?
b)How much X and Y will Sally demand at current market prices? What will Sally's utility be with that consumption?
c)Find the income elasticity and the price elasticity of demand for X.

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The Answer of Sally consumes two goods, X and Y. Her utility function is given by the expression U(X,Y)= X^0.4Y^0.6. The current market price of X is $20 per unit, while the market price of Y is $100 per unit. Sally's current income is $10,000. a)Calculate Sally's demand for X as a function of prices and incomes. Is good X normal? b)How much X and Y will Sally demand at current market prices? What will Sally's utility be with that consumption? c)Find the income elasticity and the price elasticity of demand for X.

Sally Consumes Two Goods, X and Y