2) For the following utility functions, using the budget constraint M = Pgx & Pyy, find the compensated (Hicksian) demand functions. Note: For a, minimize expenditure; For b, maximize utility and use the Shepard's Lemma. a) U(x,y) = x0.5 + 2y0.5 b) U(x, y) = min{2x,5y}

2) For the following utility functions, using the budget constraint M = Pgx & Pyy, find the compensated (Hicksian) demand functions. Note: For a, minimize expenditure; For b, maximize utility and use the Shepard's Lemma. a) U(x,y) = x0.5 + 2y0.5 b) U(x, y) = min{2x,5y}

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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2) For the following utility functions, using the budget constraint M = Pxx & Pyy, find the
compensated (Hicksian) demand functions. Note: For a, minimize expenditure; For b, maximize
utility and use the Shepard's Lemma.
a) U(x,y) = x0.5 + 2y0.5
b) U (x, y) = min{2x, 5y}

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