Consumeri's direct utility function is of the form: %3D where 1, x2 > 0 and a is a parameter. Assume that the consumer's preferences are convex and monotonic. (a) What restrictions must there be on the value of parameter a for the preferences to satisfy the convex and monotonicity properties of the utility function? Explain.

Consumeri's direct utility function is of the form: %3D where 1, x2 > 0 and a is a parameter. Assume that the consumer's preferences are convex and monotonic. (a) What restrictions must there be on the value of parameter a for the preferences to satisfy the convex and monotonicity properties of the utility function? Explain.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter3: Preferences And Utility

Section: Chapter Questions

Problem 3.13P

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