1. Jane has the utility function, UJ = K + αln(X) + βln(Y) and Julio has the utility function, UR = G + γln(X) + θln(Y), where θ, γ, β, α, K, and G are positive and constant. Suppose K ≠ G, α ≠ γ and β ≠ θ. Let Jane’s income be I and the prices of X and Y be Px and Py.
(i) Is it possible that Jane and Julio have the same preferences? If yes, explain how? If not, why? Support your answer mathematically.
(ii) Derive the proportion of Jane’s income spent on X.
(iii) Derive Jane’s price elasticity of demand.