Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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![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.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F44bc462b-9c1c-4e0f-8a31-0cd53f442170%2F63b71a0c-f327-4e9d-98e5-40c7a9950585%2Fjl3g5d8_processed.png&w=3840&q=75)
Transcribed Image Text: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](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F44bc462b-9c1c-4e0f-8a31-0cd53f442170%2F63b71a0c-f327-4e9d-98e5-40c7a9950585%2F0kkehur_processed.png&w=3840&q=75)
Transcribed Image Text: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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