Answer:
Explanation:Suppose Nancy’s utility function is u(x1, x2) = x2 2 -7x1,where x1 and x2 denote two different consumption goods.
a) Is x1 a neutral good, a "good" good, or a "bad" good? Is x2 a neutral good, a "good" good or a "bad" good?
b) If the price of x1 is $1 (p1=$1), price of x2 is $2, (p2=$2), and Nancy’s income is $100 (m=$100). What is her optimal consumption bundle that maximize her utility?