Question
Question 3: Good Types and Calculus. (20 pts) Consider the general Cobb-Douglas utility function: (1, 2) = 1, (0, 1). 12 Hint: you will need
Question 3: Good Types and Calculus. (20 pts) Consider the general Cobb-Douglas utility function: (1, 2) = 1, (0, 1).
12
Hint: you will need calculus to explain some of your answers. (a) Show why the goods cannot be Giffen with these preferences. (8 pts)
(b) Show that with these preferences, the goods must be normal goods. (8 pts) (c) Referring to normal goods, what sign does the total effect (TE) have? Explain why.
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The Economics of Women Men and Work
Authors: Francine D. Blau, Marianne A. Ferber, Anne E. Winkler
7th edition
978-0190670863, 019067086X, 132992817, 978-0132992817
