according to the question:
a)
Using equations (1) and (2), we get
Demand function of x :
It depends on the prices of y and x. Since its a quasilinear function in x so demand of x does not depend on income.
b) Demand function of y:
Using the budget constraint equation and demand function of x :
Thus, demand for y depends on prices as well as on income.
c) A normal good is a good whose demand increases as the consumer's income increases.
To check whether y is a normal good or not, we have to evaluate the income elasticity of y.
Income elasticity = % change in demand / % change in M
Em is positive since M, y and p_y are positive numbers. So, y is the normal good.
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