Qn 3.59 pp.170 Martin Caley MCaley martin.caley@economics.treasury.gov.im

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Topic: Qn 3.59 pp.170
Conf: Chapter 2, Topics in Consumer Theory, Msg: 15206
From: Martin Caley (martin.caley@economics.treasury.gov.im)
Date: 3/2/2005 09:34 AM

Qn 3.59 pp.170 Martin Caley MCaley martin.caley@economics.treasury.gov.im This is now Exercise 1.59 but there is a slight problem with the posted answer as neither p1 nor p2 is a function of y.

From the symmetry of the substitution term and the Slutsky equation we have dx1/dp2 + x2.dx1/dy = dx2/dp1 + x1.dx2/dy. Multiply thru by y/x1.x2 and use the equal income elasticity condition.