Suppose the utility function for goods x and y is given by:
U(x; y) = xy + y
a) Calculate the uncompensated (Marshallian) demand functions for
x andy and describe how the demand curves for x and y are
shifted by changes in I or the price of the other good.
b) Calculate the expenditure function for goods x and y.
c) Use the expenditure function calculated in part b) to compute
the compensated demand functions for goods x and y . Describe
how the compensated demand curves for x and y are shifted by
changes in income or by changes in the price of the other good.
U(x; y) = xy + y
a) Calculate the uncompensated (Marshallian) demand functions for
x andy and describe how the demand curves for x and y are
shifted by changes in I or the price of the other good.
b) Calculate the expenditure function for goods x and y.
c) Use the expenditure function calculated in part b) to compute
the compensated demand functions for goods x and y . Describe
how the compensated demand curves for x and y are shifted by
changes in income or by changes in the price of the other good.
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