Intermediate Microeconomics I (Econ 2002)
Take Home Assignment – Problem Set C
Due Date: Oct 31st, 2019
Total Points: 30
This assignment constitutes 15% of your final grade.
1. Suppose that an individual’s direct utility function is represented implicitly by:
log i i
i
i i
  x         = u
where i =
1
i iu
u
  

, and i, i, and i are parameters.
a) Derive the Hicksian expenditure function. (6 points)
b) Derive the Hicksian and Marshallian (if possible) budget share equations from (a). (9
points)
c) What are the restrictions to be imposed on i, i, and i? (6 points)
d) Suppose that i i     i . Derive the Marshallian demand functions and the
expenditure elasticities. Is it possible that i x is inferior? (9 points)