(2) (a) Write out Ann's expenditure minimization problem for U(x, y) > Ū. (b) Write out the tangency condition for expenditure minimization. (You do not need to show your work.) How does it compare to the tangency condition in Part (1c) above. Explain (50 words or fewer.) (c) Now set, P₂ = 4 and Py = 2. Use the tangency condition and U(x, y) = U to solve for Ann's compensated demands as a function of U. (Normally, compensated demands are functions of U, Pr, and Py. Here we have explicit values for the prices, and compensated demands will be a function of only Ū. It is worth noting that if a = 6³, then b = a) (d) Use your answer to Part c to write out Ann's expenditure function.

(2) (a) Write out Ann's expenditure minimization problem for U(x, y) > Ū. (b) Write out the tangency condition for expenditure minimization. (You do not need to show your work.) How does it compare to the tangency condition in Part (1c) above. Explain (50 words or fewer.) (c) Now set, P₂ = 4 and Py = 2. Use the tangency condition and U(x, y) = U to solve for Ann's compensated demands as a function of U. (Normally, compensated demands are functions of U, Pr, and Py. Here we have explicit values for the prices, and compensated demands will be a function of only Ū. It is worth noting that if a = 6³, then b = a) (d) Use your answer to Part c to write out Ann's expenditure function.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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A9
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c only please
Urgent
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