An individual with (a strictly monotone) utility function u, facing prices and income (p, I) has a Walraisian demand of æ*(p, I). Let ū = u(æ*(p, I)). What is the (minimal) expenditure for her to obtain utility ū. Intuitively (in words), why does this answer make sense?

An individual with (a strictly monotone) utility function u, facing prices and income (p, I) has a Walraisian demand of æ(p, I). Let ū = u(æ(p, I)). What is the (minimal) expenditure for her to obtain utility ū. Intuitively (in words), why does this answer make sense?

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter5: Income And Substitution Effects

Section: Chapter Questions

Problem 5.5P

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An individual with (a strictly monotone) utility function u,
facing prices and income (p, I) has a Walraisian demand of æ*(p, I). Let ū =
u(æ*(p, I)). What is the (minimal) expenditure for her to obtain utility ū.
Intuitively (in words), why does this answer make sense?

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