Consider a consumer with indirect utility function v(p1,p2,I) = I/sqrt(p1p2), what is the consumer's expenditure function? what
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Question:
Consider a consumer with indirect utility function v(p1,p2,I) = I/sqrt(p1p2), what is the consumer's expenditure function? what is the consumer's Hicksian demand function? suppose that the consumer initially has I = 400 and the prices are p1=p2=100, what would be the compensating variation if p1 increase to400? compute Paasche and Laspeyres price indexes for ths price change.how do they compare with the cost of living adjustment suggested by the compensation variation?
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