Question

i need help with (b) and (c)!!! thank u!!!!

Jeanette has the following utility function: U= a*In(x) + b*In(y), where a+b=1 a) For a given amount of income I, and prices Px. Py, find Jeanette's Marshallian demand functions for X and Y and her indirect utility function. (6 points) b) From now on, you can use the fact that the utility parameters are a=0.2 and b=0.8. Find the Hicksian demand functions and the corresponding expenditure function. (6 points) c) Suppose Jeanette has 50 dollars to spend on X and Y, and the prices of these goods are Px = 2 and Py = 10. Compute the total effect, the substitution effect, and the income effect generated by a small change in Px (Hint: use the Slutsky equation). (8 points)

Answer 1

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