Question Use the utility function u(x1, x2) = logx:+ logx2 and the budget constraint p.x: + px2= 1. b) Derive the indirect utility function (maximum value function).Differentiate the indirect utility function with respect to income. Comment on result. c) Use the envelope theorem to derive the result that you got in question (b).
Question Use the utility function u(x1, x2) = logx:+ logx2 and the budget constraint p.x: + px2= 1. b) Derive the indirect utility function (maximum value function).Differentiate the indirect utility function with respect to income. Comment on result. c) Use the envelope theorem to derive the result that you got in question (b).
Chapter6: Consumer Choice Theory
Section: Chapter Questions
Problem 23SQ
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Hello, I need some help with the attached question, parts b) and c). The topic is on constrained consumer optimisation.
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