2. Suppose there are two consumers in a country: consumer 1 and consumer 2. The two...

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2. Suppose there are two consumers in a country: consumer 1 and consumer 2. The two consumers have the following Cobb-Douglas utility function defined over consumption of goods X and Y: where 0 < β < 1. Each consumer has a different income, consumer 1 has income 1, while consumer 2 has income 12. For now, we will treat the income of each consumer as given. Denote aggregate income as I 12. (a) (10 points) Derive each consumers individual Marshallian demands and the de- rive aggregate Marshallian demand to show that aggregate demand depends only on aggregate income and not the distribution of income. (b) (10 points) Suppose now that each consumers utility function is given by where γ is a positive constant. Determine what share of aggregate income should each consumer have to maximize aggregate demand for good X

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2. Suppose there are two consumers in a country: consumer 1 and consumer 2. The two...

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