Question: PLEASE SOLVE ALL THE QUESTIONS 1. Suppose the solution to a consumer's expenditure minimization problem is the following expenditure function: E(p1,p2,U)=(2p1p2)1/2+p2U a. State in words

PLEASE SOLVE ALL THE QUESTIONS

1. Suppose the solution to a consumer's expenditure minimization problem is the following expenditure function: E(p1,p2,U)=(2p1p2)1/2+p2U a. State in words what the expenditure function measures. b. Derive for the Hicksian (compensated) demand functions for x1 and x2. Explain your method. c. Derive the indirect utility function. Be careful with your notation. d. Derive the Marshallian (uncompensated) demand functions for x1 and x2. Explain your method. e. Suppose p1 increases from to p1. Define in words compensating variation (CV) and equivalent variation (EV). Use the expenditure function to write an expression for CV and EV. f. Suppose that initial prices are p1=$2 and p2=$1, and the consumer's income is $4,212 per month. Calculate the harm to the consumer of a $1.00 increase in the price of good 1 using the notion of CV,EV and change in consumer surplus

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