Question: Consider the utility function U(x,y) = min{2x,3y}. Let p x , p y and I denote the price of x, the price of y and

Consider the utility function U(x,y) = min{2x,3y}. Let px, py and I denote the price of x, the price of y and the income level respectively.

  1. Find the Hicksian demand functions for x and y.
  2. Find the expenditure function.
  3. Without solving the utility maximization problem, recover the indirect utility function and the Marshallian demand functions.
  4. Now suppose that px = 2, py = 4 and I = 40. Compute the value of the Marshallian demands for x and y and the corresponding optimal utility level u*.
  5. Use the utility level computed in part 4 to verify that the Hicksian demands are equal to the Marshallian demands for x and y

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