problem in Robert_C._FeenstraAdvanced_International_Trade 2003 Chp 7

7.7 Output of the home rm is y = d(q, p, I). (a) Use the fact that d(q, p, I) is homogeneous of degree zero in (q, p, I) to show that dag + dpp + dII = 0. Then use the assumption that the income elasticity of demand is unity to show that dpp/d = (n 1)) where T] E dgq/d. (b) Using part (a), compute the total change in home output 3/ = d( g, p, I) as p increases along the home reaction curve. Show that output in creases ifO