ECN700-HW3 - and income(c Find the indirect utility...

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Problem Set 3 1. Suppose an individual’s utility function is represented by the CES func- tion: U ( x, y ) = - 1 x - 1 y (a) Use the Legrangian multiplier method to calculate the uncompensated (Marshallian) demand functions for X and for Y. (b) Show that demand functions are homogeneous of degree zero in prices
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Unformatted text preview: and income. (c) Find the indirect utility function V [ p x , p y , I ]. (d) Find the expenditure function E [ p x , p y , U ]. (e) Find the compensated demand function (don’t worry about simplifying your answer). 2. Problem 5.5 (page 174) 1...
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