Answer to Question #51590 in Microeconomics for D V L Parimala
U(x,y) = In (x+2y- *
Where x and y are two goods of consumption.
(a) Find the indirect utility function of the consumer.
(b) Examine if Roy’s law is satisfied by the consumer’s demand function for y.
(b) Roy's identity (named for French economist René Roy) is a major result in microeconomics having applications in consumer choice and the theory of the firm. The lemma relates the ordinary (Marshallian) demand function to the derivatives of the indirect utility function. Specifically, where V(P,Y) is the indirect utility function, then the Marshallian demand (dX1) is a function of the price of X1, the price of X2 (assuming two goods) and the level of income or wealth (m):
X*=dX1(PX1, PX2, m)
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