For a homothetic production function show that the cost functio... | Filo
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For a homothetic production function show that the cost functio... | Filo
Solution For For a homothetic production function show that the cost function must be expressible in the form.C(\mathbf{w}, q)=a(\mathbf{w}) b(q) .
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SOLVED:a. Show that the CES function is homothetic. How does the M R S depend on the ratio F / X ? b. Show that your results from part (a) agree with Example 3.3 for the case 6=1 (perfect substitutes ) and 5=0 (Cobb-Douglas). c. Show that the M R S is strictly diminishing for all values of 8<1 d. Show that if X=Y, the M R S for this function depends only on the relative sizes of a and j8. e. Calculate the M R S for this function when Y / X=.9 and Y / X=1.1 for the two cases 8=.5 and 8=-1 . What
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SOLVED:a. Show that the CES function is homothetic. How does the M R S depend on the ratio F / X ? b. Show that your results from part (a) agree with Example 3.3 for the case 6=1 (perfect substitutes ) and 5=0 (Cobb-Douglas). c. Show that the M R S is strictly diminishing for all values of 8<1 d. Show that if X=Y, the M R S for this function depends only on the relative sizes of a and j8. e. Calculate the M R S for this function when Y / X=.9 and Y / X=1.1 for the two cases 8=.5 and 8=-1 . What
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let f x1 x2 be a homothetic function show that its tech nical rate of substitution at x1 x2 equals its technical rate of substitution attx1 tx2 98277
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