I need answers of f,g,h 1. Think about a utility function U(x,y) =xy, the budget constraint is px*x +py*y= m.a. Please derive the Marshallian demand functions.b. Please derive the indirect utility function.c. Please derive the expenditure function.If originally m = 8, px=1, py=4.d. What is his optimal consumption?e. What is his maximum utility level?Now px has increased to 2.f. Based on (c), after the price change, how much should be compensated to maintain hisoriginal utility level?g. Use the Shaphard's Lemma to derive the Hicksian demand functions.h. Based on (g), after the price change and the compensation, what is his optimalconsumption?

Given Utility function U=XY Budget constraint M=Px*X+Py*Y

Answered: 1. Think about a utility function…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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I need asnwers of a,c,g. Assume there is consumer, his utility function is u(x,y) =8 * x0.5+y , and his budget constraint is px*x +y = m, which implies py = 1. a.Please derive the Marshallian demand function of x. b.Please derive the indirect utility function. c. Please derive the expenditure function If originally m = 40, px=2. d. What is his original highest utility level? Now px has decreased to 1, m and py do not change. e. What is his new maximum utility level? f. Based on (c) (d) and (e), what is his compensating variation? g.Based on (c) (d) and (e), what is his equivalent variation?
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