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4. Suppose there are i=1,,I consumers with utility functions ui(x) and wealth wi>0. We consider a change from p0 to p1. Show that if iCVi(p0,p1,wi)>0,
4. Suppose there are i=1,,I consumers with utility functions ui(x) and wealth wi>0. We consider a change from p0 to p1. Show that if iCVi(p0,p1,wi)>0, then we can find {wi}i=1I such that iwiiwi and vi(p1,wi)vi(p0,wi) for all i. That is, it is in principle possible to compensate everybody for the change in prices. (MWG 3.I.6). 4. Suppose there are i=1,,I consumers with utility functions ui(x) and wealth wi>0. We consider a change from p0 to p1. Show that if iCVi(p0,p1,wi)>0, then we can find {wi}i=1I such that iwiiwi and vi(p1,wi)vi(p0,wi) for all i. That is, it is in principle possible to compensate everybody for the change in prices. (MWG 3.I.6)
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