2. A consumer has the utility function u = (x₁c₁)" (x₂-C₂), a+b=1 U=(X1C1) (X2 C₂), a+b=1 where the ci are interpreted as minimum subsistence levels of ,i = 1,2 xi,i=1,2. Derive the consumer's Hicksian demand functions and expenditure function. 3. The consumer has the utility function = "u=x1ax21-a. (a) Find her indirect utility function. (b) Confirm Roy's identity by: i. Differentiating the indirect utility function with respect to the price of good 1; ii. Using the first-order conditions to obtain solutions for 1x1 and XX, and therefore an expression for -A1-AX1; iii. Showing that (a) and (b) give the same result.
2. A consumer has the utility function u = (x₁c₁)" (x₂-C₂), a+b=1 U=(X1C1) (X2 C₂), a+b=1 where the ci are interpreted as minimum subsistence levels of ,i = 1,2 xi,i=1,2. Derive the consumer's Hicksian demand functions and expenditure function. 3. The consumer has the utility function = "u=x1ax21-a. (a) Find her indirect utility function. (b) Confirm Roy's identity by: i. Differentiating the indirect utility function with respect to the price of good 1; ii. Using the first-order conditions to obtain solutions for 1x1 and XX, and therefore an expression for -A1-AX1; iii. Showing that (a) and (b) give the same result.
Chapter4: Utility Maximization And Choice
Section: Chapter Questions
Problem 4.13P
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