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Topic: expenditure function
Conf: Chapter A2, Calculus and Optimization, Msg: 14985
From: Martin Caley (martin.caley@economics.treasury.gov.im)
Date: 10/4/2004 10:46 AM

expenditure function Martin Caley MCaley martin.caley@economics.treasury.gov.im For t>0 we need to show min tp.x = t min p.x or, equivalently, that the same bundle x is chosen at both p and tp. Let x be chosen at prices p. Assume that x is not chosen at tp. Then there exists x* such that tp.x* < tp.x. But t>0 so this implies p.x* < p.x, a contradiction.