2. Cynthia has preferences represented by the utility function u(x) = x² + x2 (a) Calculate Cynthia's marginal rate of substitution. (b) Calculate Cynthia's Marshallian Demand functions x" (p, 1) and x (p, 1). (c) Does Cynthia consider either of these goods to be Inferior Goods? (d) Show that Cynthia's demands generate an indirect utility function V(p, 1) = √I. (e) Solve for Cynthia's expenditure function. P₁+P₂ P1P2
2. Cynthia has preferences represented by the utility function u(x) = x² + x2 (a) Calculate Cynthia's marginal rate of substitution. (b) Calculate Cynthia's Marshallian Demand functions x" (p, 1) and x (p, 1). (c) Does Cynthia consider either of these goods to be Inferior Goods? (d) Show that Cynthia's demands generate an indirect utility function V(p, 1) = √I. (e) Solve for Cynthia's expenditure function. P₁+P₂ P1P2
Chapter4: Utility Maximization And Choice
Section: Chapter Questions
Problem 4.13P
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