Question
Given a budget of I dollars, the consumer intends to determine how to allocate the budget between two goods, x1 and x2 . (1) Derive
Given a budget of I dollars, the consumer intends to determine how to allocate the budget between two goods, x1 and x2 .
(1) Derive the tangency condition and graphically explain why the bundle satisfying the tangency condition is an equilibrium. (10 points)
(2) Mathematically derive the indirect utility function V(Px, Py, I).
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International Economics
Authors: Robert C. Feenstra, Alan M. Taylor
3rd edition
978-1429278515, 142927851X, 978-1319029517, 1319029515, 978-1429278447
