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CAS EC 501 Microeconomics

Assignment 2

1. NS 5.2 ("David N. gets $3 per week....")

2. NS 5.4 ("As in Example 5.1, assume...")

3. NS 5.8 ("Show that the share...")

4. Use the fact that the Marshallian demand functions are homogenous of degree zero in (p;w) to show that the compensated demand functions are homogeneous of degree zero in prices.

5. The Slutsky matrix contains the derivatives of the compensated demand functions. More speciÖcally, entry i;j is:

sij  = @xi(C) (p;u)                                                    (1)

Use Shepardís lemma to show that the Slutsky matrix is symmetric.