Question

Indirect utility function v(p1,p2 :m) =m/min (p1,p2)
What is expendicture function, demand function and ditet utility function

Answer 1

Answer on Question # 70372, Economics / Microeconomics

Question

Indirect utility function $v(p_1, p_2 : m) = m/min (p_1, p_2)$

What is expenditure function, demand function and ditet utility function

Answer

If indirect utility function $v(p_1, p_2 : m) = m/min (p_1, p_2)$, then expenditure function is $E = (P_1, P_2, U)$, where $U = X^* + Y^*$

Then demand function is $x = -(dv/dp1)/(dv/dm)$, $y = -(dv/dp2)/(dv/dm)$.

Then ditet utility function is $U(x,y) = \sqrt{x} + \sqrt{y}$