Suppose that your production function is given by: Y = (₁x₁ + ₂x₂ )^1/ For 1.

a) Calculate the TRS_1,2.

b) Calculate the elasticity of substitution (if you are having trouble with the idea of TRS_1,2/(x1/x2) then substitute x₁/x₂ with in the TRS_1,2, calculate TRS_1,2/ and then substitute with x₁/x₂ in the end).

c) Now suppose that 1. What happens to the elasticity of substitution? If you were to draw the isoquants you would see the isoquants would start approximating a regularly used production function, which one?

Suppose that your production function is given by: Y = (a1$f+ agxg' For pg 1. a) Calculate the T123172. b) Calculate the elasticity of substitution (if you are having trouble with the idea of $725 then substitute 3]; with in the TRSI 2, calculate BTRSI'Z and then substitute 96 with 1 in the end . 5 6 $2 c) Now suppose that p > 1. What happens to the elasticity of substitution? If you were to draw the isoquants you would see the isoquants would start approximating a regularly used production function, which one