Consider the following utility function, u (x1, x2) = min [√x1, √√αx2], where a 0 (a) [15 points] Derive the Marshallian demand functions. (Explain your derivation in details.) Does the Marshallian demand increase with price? Are the two consumption goods normal goods? (b) [15 points] Show two different ways to derive the Hicksian demand functions. Does the Hicksian demand increase with price?
Consider the following utility function, u (x1, x2) = min [√x1, √√αx2], where a 0 (a) [15 points] Derive the Marshallian demand functions. (Explain your derivation in details.) Does the Marshallian demand increase with price? Are the two consumption goods normal goods? (b) [15 points] Show two different ways to derive the Hicksian demand functions. Does the Hicksian demand increase with price?
Chapter5: Income And Substitution Effects
Section: Chapter Questions
Problem 5.1P
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![Consider the following utility function,
u (x1, x2) = min [√x1, √√αx2], where a 0
(a) [15 points] Derive the Marshallian demand functions. (Explain your derivation
in details.) Does the Marshallian demand increase with price? Are the two
consumption goods normal goods?
(b) [15 points] Show two different ways to derive the Hicksian demand functions.
Does the Hicksian demand increase with price?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fcf58e778-209d-4051-b758-0c57e3f8187c%2F6296910f-45a2-4bc5-af9f-f950ca8815bf%2Fv7lw9ve_processed.png&w=3840&q=75)
Transcribed Image Text:Consider the following utility function,
u (x1, x2) = min [√x1, √√αx2], where a 0
(a) [15 points] Derive the Marshallian demand functions. (Explain your derivation
in details.) Does the Marshallian demand increase with price? Are the two
consumption goods normal goods?
(b) [15 points] Show two different ways to derive the Hicksian demand functions.
Does the Hicksian demand increase with price?
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