Question: Could you please explain me how to prove this property? This exercise is too hard for me to understand :( I The following propertyI of

 Could you please explain me how to prove this property? This

Could you please explain me how to prove this property? This exercise is too hard for me to understand :(

exercise is too hard for me to understand :( I The following

I The following propertyI of the Hicksian demand him} = w rm: 1, ...,k I Let us now prove this result in the general case. I Suppose that the consumer can consume 1: different goods. I A consumption bundle is denoted by vector x = [11,...,Xk]. I Prices of the goods are given by vector p 2 {p1, ..., pk]. I The consumer's utility function is ufx]. Questions: 1. Suppose that the consumer wants to achieve a level of utility u at minimal expenditure. 1Write down the consumer's problem and derive the first order conditions. For the fr goods, just write one condition with respect to some good j {focus on the interior solutions]. . Solving this problem gives the optimal bundle x[p, u}, which can also be denoted by h{p, u], but this is just a matter of notation. For now, let's use x{p, u] . How can we then write the expenditure function e[p, u}? . Take the expression for efp, u] you have written in question 2 and differentiate both sides with respect to p,-. . Come back to the first order condition with respect to good j you derived in question 1. Use it to get an expression for pi. Use the expression for p,- to replace prices in the equation you derived in question 3. Now take the constraint of the consumer's problem, u[x] = u. Differentiate both sides with respect to p;. Use the result you get in question 5 in the equation of question 5. If you now use the notation l1,{p, u} for x;[p, u}, you should have the proof completed

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