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5.(30 pts) Consider the CobbDouglas utility function U(x,y)=xy1_ 5.(30 pts) Consider the CobbDouglas utility function U(x,y)=xayla, where Ofusl. This problem illustrates a few more attributes
5.(30 pts) Consider the CobbDouglas utility function U(x,y)=xayla, where Ofusl. This problem illustrates a few more attributes of that function. a. b. c. Calculate the indirect utility function for this CobbDouglas case. Calculate the expenditure function for this case. Show explicitly how the compensation required to offset the effect of an increase in the price of x is related to the size of the exponent a.
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Intermediate Microeconomics
Authors: Hal R. Varian
9th edition
978-0393123975, 393123979, 393123960, 978-0393919677, 393919676, 978-0393123968
