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Assignment:
This question deals with the theory of the consumer.
(1) Consider a consumer who consumes only two goods, good 1 and good 2 with corresponding prices p1 and p2. Suppose that this consumer has an indirect utility function
v(p1, p2,w) = w/p1+p2
Does this indirect function satisfy the monotonicity properties that one would expect of an indirect utility function? Give a justi?cation for your answer, explaining how you know that the function has the property.
(2) Find the Marshallian and Hicksian demand functions for a consumer with the indirect utility function given in equation (1), carefully explaining how you do so and What results from the theory of the consumer you are using.
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