Consider the following strictly quasi-concave utility function u(q1, 92) = J91 +2/q2 Assume that p1and p2 are the respective prices of q, andq2. a) Derive Marshallian Demand functions. b) Derive Indirect utility function c) Derive expenditure function using indirect utility function

Consider the following strictly quasi-concave utility function u(q1, 92) = J91 +2/q2 Assume that p1and p2 are the respective prices of q, andq2. a) Derive Marshallian Demand functions. b) Derive Indirect utility function c) Derive expenditure function using indirect utility function

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter5: Income And Substitution Effects

Section: Chapter Questions

Problem 5.4P

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Concept explainers

Form Utility

The term utility in general refers to the satisfaction earned from usage of a particular product or service. Utility always plays an important role because it influences various important elements like demand & thereby the price of the good or service as well. Though utility is not easy to measure, various types of economic models can be used indirectly. There can be various types of utilities like economic utility, marginal utility, cardinal utility, form utility.

Question

Consider the following strictly quasi-concave utility function
u(q1, 42) = J91 + 2/92
Assume that p,and p2 are the respective prices of q, andq2.
a) Derive Marshallian Demand functions.
b) Derive Indirect utility function
c) Derive expenditure function using indirect utility function
d) Derive Hicksian Demand function from the cost function.
e) Derive Hicksian Demand function using expenditure funciton

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