3.8 Example 3.3 shows that the MRS for the Cobb-Douglas function U(X, Y) = X aY^ is...

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3.8 Example 3.3 shows that the MRS for the Cobb-Douglas function U(X, Y) = X aY^

is given by MRS= ^(Y/X).

a. Does this result depend on whether a + (3 = 1? Does this sum have any relevance to the theory of choice?

b. For commodity bundles for which Y = X, how does the MRS depend on the values of a and /3? Develop an intuitive explanation of why if a > (3, MRS > 1. Illustrate your ar gument with a graph.

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Microeconomic Theory Basic Principles And Extensions

ISBN: 9780030335938

8th Edition

Authors: Walter Nicholson

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Question Posted: Nov 14, 2024 01:00 AM

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3.8 Example 3.3 shows that the MRS for the Cobb-Douglas function U(X, Y) = X aY^ is...

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Microeconomic Theory Basic Principles And Extensions

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