A consumer’s utility function is given by: U(X1,X2)= X(α),X(1-α) where A>0, 0<α<1 The consumer also faces the prices P1 and P2 has income level m. a.) Obtain the consumer’s demand functions for and as well as the indirect utility function of the consumer b.) Show that the consumer’s indirect utility function is homogenous of degree zero in both prices and income. c.) Set up the expenditure minimization problem and find the expenditure function E(p,u)

A consumer’s utility function is given by: U(X1,X2)= X(α),X(1-α) where A>0, 0<α<1 The consumer also faces the prices P1 and P2 has income level m. a.) Obtain the consumer’s demand functions for and as well as the indirect utility function of the consumer b.) Show that the consumer’s indirect utility function is homogenous of degree zero in both prices and income. c.) Set up the expenditure minimization problem and find the expenditure function E(p,u)

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter3: Preferences And Utility

Section: Chapter Questions

Problem 3.3P

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