Derive the expenditure function for utility level u

Assignment Help Macroeconomics

Reference no: EM13177588

A consumer of two goods faces positive prices for both goods and has positive income. Her preferences over consumption of good 1 and good 2 are represented by the following utility function: u(x1; x2) = e^(x1+ln(x2))^.5
Assume, the price of good 1 is 1 (p1 = 1) and the price of good two is p2 > 0. Use m to denote income.
a. What properties about utility functions will make this problem easier to solve?
b. Which of the non negativity constraints on x1; x2 will bind for small m?
c. Derive for the Marshallian demand functions and the indirect utility function.
d. Derive the expenditure function for utility level u.

Reference no: EM13177588

Questions Cloud

What value should the company capitalize the building : At what value should the company capitalize the building and would your answer change if the bid from the outside contractor had been $80,000? $60,000?

Find for what values of p1/p2 will the optimum : A consumer of two goods faces positive prices for both goods and has positive income. Her preferences over consumption of good 1 and good 2 are represented by the following utility function: u(x1; x2) = min {2x1 + x2; x1 + 2x2}

Compute the amount of interest costs capitalized each year : If it is assumed that the production complex has an estimated life of 20 years and a residual value of zero, compute the straight-line depreciation in 2010.

How to find the sum of each series : how to find the sum of each series?

Derive the expenditure function for utility level u : Which of the non negativity constraints on x1; x2 will bind for small m? c. Derive for the Marshallian demand functions and the indirect utility function. d. Derive the expenditure function for utility level u.

In what ways is it better : What is the difference between a scatter plot and a line graph? Provide an example of each. Does one seem better than the other? In what ways is it better?

Find the optimal solution : there are three items from which to choose. their volumes are 2,3 and 4ft^3. and the hiker estimates their associated values on a scale from 0 to 100 as 30, 50 and 70,respectively. express the problem as longest route network, and find the optimal..

What is the necessary levels of high powered money : Suppose the ratio of deposits that banks hold in the form of reserves is 7 percent. Suppose further that people want to hold 8 percent of their deposits in the form of cash. Then if the fed wants the money supply to be $6,228 billion, what is the ..

Who has the most money in their account : Assuming both retire at 70, and that the interest rate both get on their investments is 10% (compounded annually) who has the most money in their account at age 70? Explain why you pick the answer you pick.

User Account

All Pages