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July 31, 2015

Homework Help: economics

Posted by ali on Wednesday, January 22, 2014 at 2:36am.

Consider a consumer who has an experienced utility function given by . Let denote the market price of good , and assume that it remains fixed throughout the problem.

The company selling the good starts an advertisement campagin that has the following effect on the consumer: he makes decisions as if maximizing a decision utility function given by .

QUESTION. Write down the expression for the difference between the consumer demand and his optimal level of consumption (as a function of ).

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