Let a consumer's indirect utility function for two goods be described as follows: 20m 5p1 + P1 v(p, m) = P2 where p1, P2 > 0 and m > 0. (a) Construct a direct utility function u that generates v as its indirect utility function. (You may use that v is quasi-convex in p.) (b) Determine the consumer's Marshallian demand x"(p, m) for good 1. (c) Determine the consumer's expenditure function e(p, u). (d) Determine the consumer's Hickisan demand x#(p, u) for good 1.

Let a consumer's indirect utility function for two goods be described as follows: 20m 5p1 + P1 v(p, m) = P2 where p1, P2 > 0 and m > 0. (a) Construct a direct utility function u that generates v as its indirect utility function. (You may use that v is quasi-convex in p.) (b) Determine the consumer's Marshallian demand x"(p, m) for good 1. (c) Determine the consumer's expenditure function e(p, u). (d) Determine the consumer's Hickisan demand x#(p, u) for good 1.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter4: Utility Maximization And Choice

Section: Chapter Questions

Problem 4.8P

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