Assume there is consumer, his utility function is u(x,y) =8 * x0.5+y , and his budget constraint is px*x +y = m, which implies py = 1. a.Please derive the Marshallian demand function of x. b.Please derive the indirect utility function. c. Please derive the expenditure function If originally m = 40, px=2. d. What is his original highest utility level? Now px has decreased to 1, m and py do not change. e. What is his new maximum utility level? f. Based on (c) (d) and (e), what is his compensating variation? g.Based on (c) (d) and (e), what is his equivalent variation?
Assume there is consumer, his utility function is u(x,y) =8 * x0.5+y , and his budget constraint is px*x +y = m, which implies py = 1. a.Please derive the Marshallian demand function of x. b.Please derive the indirect utility function. c. Please derive the expenditure function If originally m = 40, px=2. d. What is his original highest utility level? Now px has decreased to 1, m and py do not change. e. What is his new maximum utility level? f. Based on (c) (d) and (e), what is his compensating variation? g.Based on (c) (d) and (e), what is his equivalent variation?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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I need asnwers of a,c,g.
Assume there is consumer, his utility function is u(x,y) =8 * x0.5+y , and his budget constraint is px*x +y = m, which implies py = 1.
a.Please derive the Marshallian
b.Please derive the indirect utility function.
c. Please derive the expenditure function
If originally m = 40, px=2.
d. What is his original highest utility level?
Now px has decreased to 1, m and py do not change.
e. What is his new maximum utility level?
f. Based on (c) (d) and (e), what is his compensating variation?
g.Based on (c) (d) and (e), what is his equivalent variation?
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