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An indirect utility function

An indirect utility function is, among other properties, zero-degree homogeneous in the prices and nominal income. That is, if you scale up each price and nominal income in the same positive proportion t, indirect utility remains unchanged. describe why this is true. (Hint: real income remains constant.

Now demonstrate this property with the Cobb-Douglas individualâ??s indirect utility function.

 

Business Economics, Economics

  • Category:- Business Economics
  • Reference No.:- M927768

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