This paper concentrates on the primary theme of GIVEN UTILITY FUNCTION U = -E -Y . A. SHOW THAT THE COINCIDENT OF ABSOLUTE RISK AVERSION R A (Y)=… in which you have to explain and evaluate its intricate aspects in detail. In addition to this, this paper has been reviewed and purchased by most of the students hence; it has been rated 4.8 points on the scale of 5 points. Besides, the price of this paper starts from £ 40. For more details and full access to the paper, please refer to the site.
Given utility function U = -e-Y.
a. Show that the coincident of absolute risk aversion RA(Y)= U”/U’ is constant (where U’ and U’’ denote the first and second derivative of U with respect to Y, respectively).
Show that U’ > 0 (positive marginal utility of income) and that U”
b. Show that the undeclared income, Y – X, is independent of Y for a consumer with this utility function.