Question: Short Essay: Suppose we know the CES utility function, U = 4x0.25 + 4y0.25 As notation, use prfor the price of r, pyfor the price

Short Essay: Suppose we know the CES utility function, U =

Short Essay: Suppose we know the CES utility function, U = 4x0.25 + 4y0.25 As notation, use prfor the price of r, pyfor the price of y, and m for revenue. (a). Find the first-order conditions for utility maximization. (b). Find the general function for demand of xand y. (c). If pr=16, py=16 and m =480, then calculate the values of x*, y* and U*. (d). Calculate the price elasticity of demand with respect to xat the point (x*, y*). (e). Are x and y gross substitutes or gross complements? Are x and y net substitutes or net complements

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