Minimizing expenditure using the lagrangian method

Assignment Help Business Economics

Reference no: EM131246373

When U= alnx+blny

(a) Solve for the utility-maximizing levels of x and y (the Marshallian demand functions)

(b) Solve for the indirect utility function.

(c) Solve for the expenditure function (either by inverting the indirect utility function or minimizing expenditure using the Lagrangian method).

(d) Show that the Marshallian demand functions can be obtained from the indirect utility function (Roy’s identity)

(e) Show that the first derivative of the Marshallian demand for x with respect to px can be obtained through the Slusky decomposition. Make sure to identify the income and the substitution effects separately.

(f) Show that the Hicksian (compensated demand) functions can be obtained from the expenditure function (Shephard’s lemma).

Reference no: EM131246373

Questions Cloud

About adverse selection and risk : Given what you know about adverse selection and risk, what, in your opinion, is the best way to provide insurance coverage to the poor and uninsured? Should the government provide financial incentives for private carriers to insure the poor and unins..

Use and nonuse values in the specific case of preserving : Distinguish between use and nonuse values in the specific case of preserving the quality of water in an underground aquifer. How might you measure the different types of benefits in this case?

Marketer implement to increase customer retention : 1. Explain why customer satisfaction may not be enough to keep customers loyal. 2. What strategies can a marketer implement to increase customer retention?

How would you now analyze your own personality : Considering everything you have learned in this course, how would you now analyze your own personality? Relate this to the theories of personality development that apply in your case. How will you use these new competencies in your work and person..

Minimizing expenditure using the lagrangian method : When U= alnx+blny. Solve for the indirect utility function. Solve for the expenditure function (either by inverting the indirect utility function or minimizing expenditure using the Lagrangian method).

List the three economic goals : List the three economic goals that guide the strategic direction of business organizations. Write a paragraph on each of them, explaining them and giving examples. Define agency theory. Describe agency costs in three to four sentences and give exam..

Describe the project the risks the mitigation plan : Recall a project that you considered at one time but decided against during the initiation phase because the risks were too great or the mitigation plan was insufficient to proceed. Describe the project, the risks, the mitigation plan, and why you..

Fixed exchange rate system and during a financial crisis : Suppose a country has maintaining a fixed exchange rate system and during a financial crisis investors want to take their capital out the country. Explain whether in your opinion, the country will be able to maintain the fixed exchange rate. Caref..

Research the role of the utilization management nurse : Determine the main purposes of each process of institutional utilization management? Which process do you think is the most important, and why? Research the role of the utilization management nurse

User Account

All Pages