Microeconomic Theory - Assignment 1 1. (100) Suppose that we have two goods, milk x and...

 

Transcribed Image Text:

Microeconomic Theory - Assignment 1 1. (100) Suppose that we have two goods, milk x and honey y with prices pa and py, respectively. Lynn is consumer with income I who inexplicably views these as perfect substitutes, with linear utility function U (x, y) = 3x + 2y (i) (10) Find Lynn's expenditure function E(px, Py, Ū). (j) (10) Show that the expenditure and indirect utility functions are consistent with each other. Microeconomic Theory - Assignment 1 1. (100) Suppose that we have two goods, milk x and honey y with prices pa and py, respectively. Lynn is consumer with income I who inexplicably views these as perfect substitutes, with linear utility function U (x, y) = 3x + 2y (i) (10) Find Lynn's expenditure function E(px, Py, Ū). (j) (10) Show that the expenditure and indirect utility functions are consistent with each other.

Answer rating: 100% (QA)

i if PxPy32 so consumer will only buy X So 3x2y3x203x X3 EPxxpyy... View the full answer