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5. Consider a consumer with indirect utility functionv(p1, p2, I) =I/p1p2. (a) What is the consumer's expenditure function? (b) What is the consumer's Hicksian demand

5. Consider a consumer with indirect utility functionv(p1, p2, I) =I/p1p2.

(a) What is the consumer's expenditure function?
(b) What is the consumer's Hicksian demand function?
(c) Suppose that the consumer initially hasI= 400 and the prices arep1=p2= 100.What would be the compensating variation ifp1increases to 400?
(d) Compute Paasche and Laspeyres price indexes for this price change. How do they compare with the cost of living adjustment suggested by the compensated variation?

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