A consumer of two goods faces positive prices for both

Reference no: EM13378263

A consumer of two goods faces positive prices for both goods and has positive income. Her preferences over consumption of good 1 and good 2 are represented by the following utility function: u(x1; x2) = e^(x1+ln(x2))^.5
Assume, the price of good 1 is 1 (p1 = 1) and the price of good two is p2 > 0. Use m to denote income.
a. What properties about utility functions will make this problem easier to solve?
b. Which of the non negativity constraints on x1; x2 will bind for small m?
c. Derive for the Marshallian demand functions and the indirect utility function.
d. Derive the expenditure function for utility level u.

Reference no: EM13378263

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