4. Michael has the utility function u(x, y) = √√x + √y. Michael's preferences are strongly increasing and strongly convex. You don't need to show this. (a) Compute the expenditure minimizing demands for x and y as functions of utility u and prices. (b) Compute the CV when prices and income change from (PxPy, 1) = (10,10,10) to (5,20,20).
4. Michael has the utility function u(x, y) = √√x + √y. Michael's preferences are strongly increasing and strongly convex. You don't need to show this. (a) Compute the expenditure minimizing demands for x and y as functions of utility u and prices. (b) Compute the CV when prices and income change from (PxPy, 1) = (10,10,10) to (5,20,20).
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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