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how to graph the demand function and please provide explanation 1. Mr. A derives utility from martinis (m) in proportion to the number he drinks:

how to graph the demand function and please provide explanation

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1. Mr. A derives utility from martinis (m) in proportion to the number he drinks: U (m) = m (1) Mr. A is particular about his martinis, however: He only enjoys them made in the exact proportion of two parts gin (g) to one part vermouth (v). Hence we can rewrite Mr. A's utility function as Uim) - Um) - mag). (21 (a) Graph Mr. A's indifference curve in terms of g and v for various levels of utility. Show that. regardless of the prices of the two ingredients, Mr. A will never alter the way he mixes martinis. {b} Calculate the demand functions for g and v. (c) Using the results from part (is), what is Mr. A's indirect utility function? (d) Calculate Mr. A's expenditure function: for each level of utility. show spending as a function of pa. and p1,. Hint: Because this problem involves a xed-proportions utility function. you cannot solve for utility-maximizing decisions by using calculus. 2. We looked at the CobbDouglas utility function U (I, y) = mayl'n, where I] S a S 1. This problem illustrates a few more attribute of that function. (a) Calculate the indirect utility function for this Cobb Douglas case. (b) Calculate the expenditure function for this case. (c) 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 o

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