Consider a consumer whose utility function is u(x1, 82) = – exp(-ax1¤2) Can you take first order conditions to solve the utility maximization problem? Explain your argument. Next solve the utility maximization problem, and derive Marshallian demands and the indirect utility function. Given your calculations, state and use the duality theorem to find the expenditure function and Hicksian demands.

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Consider a consumer whose utility function is
u(x1, 12) = – exp(-ax1x2)
Can you take first order conditions to solve the utility maximization problem? Explain your argument. Next
solve the utility maximization problem, and derive Marshallian demands and the indirect utility function.
Given your calculations, state and use the duality theorem to find the expenditure function and Hicksian
demands.
Transcribed Image Text:Consider a consumer whose utility function is u(x1, 12) = – exp(-ax1x2) Can you take first order conditions to solve the utility maximization problem? Explain your argument. Next solve the utility maximization problem, and derive Marshallian demands and the indirect utility function. Given your calculations, state and use the duality theorem to find the expenditure function and Hicksian demands.
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