Q2 Consider the Cobb-Douglas utility function, u,(X, Y) = Xª Y' -ª for a rational consumer i. Derive the Marshallian demand functions for X and Y. ii. Use the Marshallian demand functions for X and Y above to compute the indirect utility function and the expenditure function. iii. Using the expenditure function obtained in part (ii) together with Shephard's lemma, derive the Hicksian compensated demand function for X and Y. iv. Suppose a = consumer's optimal bundle. Illustrate your results graphically as well. v. If the government gives $10 financial support weekly for each family during the COVID-19 lockdown period, how would the results be changed in iv? While presenting the calculations clearly, illustrate the outcome graphically. 0.5, Px= Py = $2, M (money income per week) = $100, find the %3D %3D %3D
Q2 Consider the Cobb-Douglas utility function, u,(X, Y) = Xª Y' -ª for a rational consumer i. Derive the Marshallian demand functions for X and Y. ii. Use the Marshallian demand functions for X and Y above to compute the indirect utility function and the expenditure function. iii. Using the expenditure function obtained in part (ii) together with Shephard's lemma, derive the Hicksian compensated demand function for X and Y. iv. Suppose a = consumer's optimal bundle. Illustrate your results graphically as well. v. If the government gives $10 financial support weekly for each family during the COVID-19 lockdown period, how would the results be changed in iv? While presenting the calculations clearly, illustrate the outcome graphically. 0.5, Px= Py = $2, M (money income per week) = $100, find the %3D %3D %3D
Chapter5: Income And Substitution Effects
Section: Chapter Questions
Problem 5.4P
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Please Show Each and Every Working VERY CLEARLY.
Please Answer ONLY (iv)
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