Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

One of the most important functions we will encounter in this book is the Cobb-Douglas function: y = (x,)(x,), where a and are positive

One of the most important functions we will encounter in this book is the Cobb-Douglas function: y = (x,)"(x,)", where a and are positive constants that are each less than 1. a. Show that this function is quasi-concave using a "brute force" method by applying Equation 2.100. b. Show that the Cobb-Douglas function is quasi-concave by showing that any contour line of the form y = c (where c is any positive constant) is convex and there- fore that the set of points for which y > c is a convex set. c. Show that if a + B > 1, then the Cobb-Douglas func- tion is not concave (thereby illustrating again that not all quasi-concave functions are concave).

Step by Step Solution

3.38 Rating (160 Votes )

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Managerial economics applications strategy and tactics

Authors: James r. mcguigan, R. Charles Moyer, frederick h. deb harris

12th Edition

9781133008071, 1439079234, 1133008070, 978-1439079232

More Books

Students also viewed these General Management questions

Question

=+b. What is Pd(2c ) when 5 4?

Answered: 1 week ago