Question: 1 . Suppose a consumer has a utility function such that U = xy / ( x + y ) which is subject to a
Suppose a consumer has a utility function such that U xyxy which is subject to a traditional budget constraint. Given this information, proceed to the questions below to solve the dual problem:
a Derive the uncompensated demand for x and y
b Derive the compensated demand for x and y
c Derive the indirect utility function
d Derive the expenditure function
e Derive the compensating variation CV equivalent variation EV and consumer surplus CS Assume income is in thousands of dollars and that the price of good y increased from $ to $ The price of good x is $ and does not change.
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