1. An agent consumes quantity (X1,X2) of goods 1 and 2. Here is his utility function:U (x1,x2) = x13x2, his budget constraint is: p1x1+p2x2=m.(a) Calculate the agent's Marshallian demand (x*, x*2).(b) Derive the agent's expenditure function.(c) Roy's identity for good 1 states that:aV(pl,p2, m)/х1* 3дV (р1, р2, т)amVerify this equation (you need not verify it for good 2).

Answered: Image /qna-images/answer/85a2e11b-5414-4982-aee7-69207faa88b0.jpg

1. An agent consumes quantity (x1,X2) of goods 1 and 2. Here is his utility function: U(x1,x2) = x1³x2, his budget constraint is: p1x1+p2x2=m. (a) Calculate the agent's Marshallian demand (x*1, x*2). (b) Derive the agent's expenditure function. (c) Roy's identity for good 1 states that: əv (p1, p2, m)/ap1 lap1 ƏV (p1,p2, m)/am x1* = Verify this equation (vou need not verify it for good 2).

1. An agent consumes quantity (x1,X2) of goods 1 and 2. Here is his utility function: U(x1,x2) = x1³x2, his budget constraint is: p1x1+p2x2=m. (a) Calculate the agent's Marshallian demand (x1, x2). (b) Derive the agent's expenditure function. (c) Roy's identity for good 1 states that: əv (p1, p2, m)/ap1 lap1 ƏV (p1,p2, m)/am x1* = Verify this equation (vou need not verify it for good 2).

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter21: The Theory Of Consumer Choice

Section: Chapter Questions

Problem 2CQQ

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