A consumer has a direct utility function of the form U(x1, x2)=u(x1) x2 Good 1 is a discrete good; the only possible levels of consumption of good 1 are x1=0 and x1=1 . For convenience, assume that u(0)=0 and p2=1 (a) What kind of preferences does this consumer have? (b) The consumer will definitely choose x1=1 if p1 is strictly less than what? (c) What is the algebraic form of the indirect utility function associated with this direct utility function? | Numerade

Consider the indirect utility function given by v(p1, p2, m)=(m)/(p1 p2) (a) What are the demand functions? (b) What is the expenditure function? (c) What is the direct utility function? | Numerade

How Is Economic Utility Measured?