Econ 400 Autumn 12 Quiz 2 Key

Econ 400 Autumn 12 Quiz 2 Key - Quig 9'—(um m i iika 1 1...

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Unformatted text preview: Quig' 9\ '—' (um m i iika 1 1 “1 17 points total. The CES utility function U(x, y) = [E + produces the following Marshailian demand functions: “(173019)” I) Z I and y(pxrpyr 1) 2 I px + pxpy py + pxpy a) (6 points) Find the indirect utility and expenditure function for these preferences. _ — 4 VCPMV‘OIX): [MT 3’ Vimj I. W in: “PM u.- ,— ‘I fit 1 EWMFW‘): V a U W E (:3 \L t p ' Barfly: QW _ :3) ELFAWM U) r: 11(1)?“be was) b) (2 points) Show that the expenditure function is homogeneous of degree one in prices. E1ng 22%) TA). ’ UCQPH «gland» QWEJ) _ (‘3 3 (Kid'an (1) (“9mg 1 H") " gm“ W") "W c) (3 points) Use Shephard’s lemma to find the compensated demand function for good x. Q _. XQéVKlV‘l; V7 ‘ SléXEW’L’W ‘0 (1W . 2” fl 5 907K Vfl‘f Pall @103 H r um WW) u Pn d) (6 points) Calculate the income and substitution effects for x, in terms of px, [JV and l. 91 d all—jg (21715 —- 5m) (5%)} mslrnnjt EFL ULH/ ...
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