Microeconomics
ECON 100A
Problem Set 8
Due November 16, 2010 (Solutions Posted November 19, 2010)
1.
You have already worked out Hicksian demand curves for a variety of different utility functions. You
have already worked out the Marshallians and indirect utility functions for the same set of utility
functions. You will use your previous answers here. You do not need to resolve them. You can use
p
x
=p
z
=Y=1, and p
x
’ = 4 to simplify things, though. For the each of the following utility functions:
i.
5
.
0
5
.
0
z)
U(x,
z
x
=
ii.
)
,
2
/
min(
z)
U(x,
z
x
=
a.
Calculate EV and CV by calculating the expenditure needed at the original prices to
achieve the original level of utility, the expenditure needed at the final prices to achieve
the original level of utility, the expenditure needed at the original prices to achieve the
final level of utility, and the expenditure need at the final prices to achieve the final level
of utility. Think carefully about what goes where. Then calculate the change of
expenditure directly (i.e. using expenditure functions, not by integrating), holding utility
This preview has intentionally blurred sections. Sign up to view the full version.
View Full Document
This is the end of the preview.
Sign up
to
access the rest of the document.
 Fall '08
 ZAMBRANO
 Microeconomics, Utility, Px, indirect utility function, Hicksian

Click to edit the document details