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2 8. Derive the indirect utility function v(p, M) by substituting u = v(p, M) in the expen- diture function, setting the expenditure function equal
2 8. Derive the indirect utility function v(p, M) by substituting u = v(p, M) in the expen- diture function, setting the expenditure function equal to M, and solving for v(p, M). 9. Derive the Marshallian demand functions r;, 12, and r; as functions of the prices P = (P1, P2, p3) and income M. To do this, use Roy's identity. du(p, M) /Opi I; (P, M) = - av(p, M)/M 10. Are goods $1, T2, and I3 normal goods? Compute the appropriate partial derivatives and answer. 11. What are the signs of Or; (p, M)/Op;, for i = 1, 2, 3? Answer and back up your answer without directly computing the partial derivatives
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