Question one A consumer's utility function is given by: U(x1,x2) = xq xı-a where A>0, 0

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Question One A Consumer S Utility Function Is Given By U X1 X2 Xq Xi A Where A 0 0 A 1 The Consumer Also Faces Th 1 (50.03 KiB) Viewed 31 times

Question one A consumer's utility function is given by: U(x1,x2) = xq xı-a where A>0, 0<a<1 = The consumer also faces the prices P1 and P2 and has income level m. (a) Obtain the consumer's demand functions for x1 and x2 as well as the indirect utility Function of the consumer. (b) Show that the consumer's indirect utility function is homogenous of degree zero in both prices and income. (c) Set up the expenditure minimization problem and find the expenditure function Elpu) d) Equivalent variation and compensating variation are equivalent ways of evaluating welfare. Discuss. (e) Explain the relationship between demand, indirect utility and expenditure functions and discuss their properties.