Question: Utility functions measure the satisfaction consumers derive from the consumption of goods and services. They are often expressed as U = AQa 1Qb 2, where
Utility functions measure the satisfaction consumers derive from the consumption of goods and services. They are often expressed as U = AQa 1Qb 2, where Q1 and Q2 are two commodities and A is a parameter.
What are the measures of elasticity of U with respect to the two goods?
Under what conditions would U prove to be inelastic in response to changes in Q1 and Q2?
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