Answered: 7.5. A consumer has a direct utility… | bartleby

Algebra & Trigonometry with Analytic Geometry

Algebra & Trigonometry with Analytic Geometry

13th Edition

ISBN:9781133382119

Author:Swokowski

Publisher:Swokowski

Chapter7: Analytic Trigonometry

Section7.6: The Inverse Trigonometric Functions

Problem 93E

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7.5. A consumer has a direct utility function of the form
U(x₁, x2) = u(x₁) + x₂.
Good 1 is a discrete good; the only possible levels of consumption of good 1
are x₁ = 0 and £₁ = 1. For convenience, assume that u(0) = 0 and p2 = 1.
(a) What kind of preferences does this consumer have?
(b) The consumer will definitely choose x₁ = 1 if p₁ is strictly less than
what?
(c) What is the algebraic form of the indirect utility function associated
with this direct utility function?

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