A consumer has preferences over 3 goods represented by the utility function u(x₁, x2, x3) = √√x1x₂-2-23. As usual, goods 1 and 2 are perfectly divisible, meaning that ₁ and ₂ can take on any nonnegative real values and need not be integers. Good 3 is indivisible and unique, meaning that ä3 must be either 0 or 1 (for example, good 3 could be an original painting). (a) Show that this consumer's preferences are monotone. (b) Find this consumer's Marshallian demand. (c) Find this consumer's expenditure function.

A consumer has preferences over 3 goods represented by the utility function u(x₁, x2, x3) = √√x1x₂-2-23. As usual, goods 1 and 2 are perfectly divisible, meaning that ₁ and ₂ can take on any nonnegative real values and need not be integers. Good 3 is indivisible and unique, meaning that ä3 must be either 0 or 1 (for example, good 3 could be an original painting). (a) Show that this consumer's preferences are monotone. (b) Find this consumer's Marshallian demand. (c) Find this consumer's expenditure function.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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