Suppose an individual consumes goods x and y and has income I. The prices are pr and Py respectively. Find (i) the optimal (Marshalian) demands for x and y as functions of prices and income (ii) the value function (indirect utility function), V(Pz, Py, I) (iii) and deduce the expenditure function when the utility function is
![(b) U(x, y) = min [ax, y]](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc3585354-64d7-4f4a-b055-4a9b75b3799d%2Fd785783a-7e04-4cf9-ad9f-bff236926065%2F9gbhry9_processed.png&w=3840&q=75)
Utility refers to the measure of satisfaction or happiness that an individual derives from consuming a good or service. It is a concept used to quantify the subjective well-being or benefit that people receive when they make choices about how to allocate their resources, such as money and time, to maximize their overall welfare. All commodity bundles with the same utility level are shown by the utility function. A graphical depiction of the utility function provides the indifference curves. Understanding utility functions is the foundation of microeconomics. Utility is a fundamental concept in economics that helps economists understand and predict consumer behavior, which in turn has implications for market demand, pricing, and resource allocation.
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