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7.18 An alternative (unconstrained) way of characterizing the standard (constrained) consumer choice problem is: n Max V(x), where V(x) = rU(x) - ru(x) - Pixi,
7.18 An alternative (unconstrained) way of characterizing the standard (constrained) consumer choice problem is: n Max V(x), where V(x) = rU(x) - ru(x) - Pixi, (x) i=1 with x = (x1, x2, ..., Xn) 0, P; > 0 for all i = 1, 2, ..., n, U(x) is the con- sumer's utility function, and the parameter r > 0 is the "price" of utility. The solu- tions to this problem are called Frisch demands and are given by x} = x}(r, P1, P2, .., Pn) for all i = 1, 2, . . ., n. (a) Show that Frisch demand curves slope downward with respect to their own price (i.e., show x/ /ap;
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