Question: 6.6 Example 6.3 computes the demand functions implied by the three-good CES utility function U (x, y, z) = 1 x 1 y

6.6 Example 6.3 computes the demand functions implied by the three-good CES utility function U

(x, y, z) = −

1 x − 1 y − 1 z .

a.

b.

Use the demand function for x in Equation 6.32 to determine whether x and y or x and z are gross substitutes or gross complements.

How would you determine whether x and y or x and z are net substitutes or net complements?

AnALYtiCAL ProBLeMs

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