Stack Exchange network consists of 175 Q&A communities including Stack Overflow, the largest, most trusted online community for developers to learn, share their knowledge, and build their careers.
I have this general form for a expenditure function $e(p,u)=f(u)\cdot g(p)$ where $f(u)$ is increasing monotonic. How can I derive a functional form for an indirect utility function from this expenditure function?
Make e (p, V (p, r))=r, hence f (V (p, r)) g (p)=r. Then use the inverse function theorem:
V (p, r)=h (r/g (p))
Where h is the inverse of f.
Required, but never shown