Unformatted text preview: c. How much will expenditure increase if the price of gin doubles? d. What happens to expenditures if both the price of gin and vermouth double? 3. For the general CobbDouglas utility function, 1 ( , ) , 0 1 a a U x y x y a= ≤ ≤ and using , , and for prices and income x y p p I a. Derive the indirect utility function and give its meaning. b. Derive the expenditure function for arbitrary utility level U and give its meaning. b. Give the best intuitive or graphical explanation that you can for why the expenditure function is concave in prices....
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 Winter '08
 Showalter,M
 Economics, Consumer price index, expenditure function

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