1. Suppose David spends his income (I) on two goods, and y, whose market

prices are pr and py, respectively. His preferences are represented by the utility

function u(x, y) = Inx + 2lny (MU₂ = 1/x, MU₂ = 2/y).

a. Derive his demand functions for x and y. Are they homogeneous in

income and prices?

b. Assuming I = $60 and p₂ = $1, graph his demand curve for y.

c. Repeat part (b) for the case in which pz = $2.