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#1.57 MICRO (SEPT. 17th) 1.57 The Stone-Geary utility function has the form "( x ) = [(q - a). where by 2 0 and _ _, b; = 1. The a: 2 0 are often interpreted as 'subsistence' levels of the respective commodities. (a) Derive the associated expenditure and indirect utility functions. Note that the former is linear in .I olam utility, whereas the latter is proportional to the amount of 'discretionary income'. y - >iz, pra. (b) Show that by measures the share of this 'discretionary income' that will be spent on 'discre- tionary' purchases of good x in excess of the subsistence level aj
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