2. Major Barbara Undershaft is a member of the Salvation Army and believes that in order...
2. Major Barbara Undershaft is a member of the Salvation Army and believes that in order to be in solidarity with poor people, she should subsist on only food and water. Her preferences over food () and water (w) are given by the following utility function: Ulf, w) = min {f, w/2} Let Y denote Major Barbara's total income; let P, denote the price of food; and let Pw denote the price of water. a. In what ratio does Major Barbara like to consume food and water? b. Derive Major Barbara's Marshallian demand functions for food and for water. C. Do her demand functions satisfy the law of demand? d. What is the cross-price elasticity of Major Barbara's demand for water with respect to the price of food?