Consider a consumer with quasilinear utility u(x) = 10ln(x₁) + X₂. (a) Find the Marshallian Demand functions when an interior solution exists. (hint: at interior solutions, there is tangency between the optimal indifference curve and the budget constraint) (b) Is the solution found in part a) always feasible? For what values of p and I is this solution feasible? (c) Given your answer to parts a) and b), write the Marshallian Demands x(p,1) and x(p,1) as piecewise functions. (d) Write the indirect utility function with respect to u.

Consider a consumer with quasilinear utility u(x) = 10ln(x₁) + X₂. (a) Find the Marshallian Demand functions when an interior solution exists. (hint: at interior solutions, there is tangency between the optimal indifference curve and the budget constraint) (b) Is the solution found in part a) always feasible? For what values of p and I is this solution feasible? (c) Given your answer to parts a) and b), write the Marshallian Demands x(p,1) and x(p,1) as piecewise functions. (d) Write the indirect utility function with respect to 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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