Question: Consider the following CES utility function: (, ) = % % a. Show that this CES function is homothetic and discuss how the MRS depends

Consider the following CES utility function: (, ) = % % a. Show that this CES function is homothetic and discuss how the MRS depends on the ratio ? b. Show that your results in 4.a agree with the discussion of the cases = 1 (perfect substitutes) and = 0 (Cobb-Douglas). c. Show that the MRS is strictly diminishing for all values of < 1. d. Show that if = , the MRS depends only on the relative sizes of and

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