The choice of utility function depends on consumer preference which then determines the market behavior of the
Question:
The choice of utility function depends on consumer preference which then determines the market behavior of the market.
Suppose the utility function of a consumer Cobb-Douglas utility function (CDF)
U(x1, x2) = x13/5x13/5. If p1 = p2 = 2 and I = 14
Calculate and Illustrate the Income and Substitution Effect when the price of good 1 increase by 100%
Calculate the Income Elasticity of Demand for both goods when the income increase by 100% and interpret your result.
Calculate the Price Elasticity of Demand for both Goods when the price increase by 100% and interpret your result.
it is trust me, copy and pasted straight from the source, one of your colleagues asked the same thing before they answered #1.
Microeconomics An Intuitive Approach with Calculus
ISBN: 978-0538453257
1st edition
Authors: Thomas Nechyba