The utility function is u(r, r2) = rr, > 0. The good 1 is a numeraire. Price of r2 is p. Income is 10. a) Show that the indifference curve are strongly convex and increasing. b) Find the Marshallian demands and the indirect utility function.

The utility function is u(r, r2) = rr, > 0. The good 1 is a numeraire. Price of r2 is p. Income is 10. a) Show that the indifference curve are strongly convex and increasing. b) Find the Marshallian demands and the indirect utility function.

Micro Economics For Today

10th Edition

ISBN:9781337613064

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter6: Consumer Choice Theory

Section6.A: Indifference Curve Analysis

Problem 5SQ

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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

The utility function is u(r, 12) = rfr, A> 0. The good 1 is a numeraire. Price of r,
is p. Income is 10.
a) Show that the indifference curve are strongly convex and increasing.
b) Find the Marshallian demands and the indirect utility function.

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