6. Show that your utility function is a CES utility function.7. Another consumer, Bing Bing, also consumes the same two goods and has a utility function givenby V(x₁, x₂) = 2ln(x0.5 + x2.5).a. How does Bin Bing's marginal rate of substitution between goods 1 and 2 compare withyours?b. Using the relevant conditions related to consumer preferences, show that Bing Bing andyou have identical preferences. I. You only consume two goods and your preferences are represented by utility functionU(x₁, x₂) = (x0.5 + x2.5)² for x₁ > 2 and x₂ > 0.1

The Constant Elasticity of Substitution (CES) utility function is a functional form that is commonly…

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6. Show that your utility function is a CES utility function.

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

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Publisher:NEWNAN

Chapter1: Making Economics Decisions

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Question

6. Show that your utility function is a CES utility function.
7. Another consumer, Bing Bing, also consumes the same two goods and has a utility function given
by V(x₁, x₂) = 2ln(x0.5 + x2.5).
a. How does Bin Bing's marginal rate of substitution between goods 1 and 2 compare with
yours?
b. Using the relevant conditions related to consumer preferences, show that Bing Bing and
you have identical preferences.

I. You only consume two goods and your preferences are represented by utility function
U(x₁, x₂) = (x0.5 + x2.5)² for x₁ > 2 and x₂ > 0.
1

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