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Economics

Suppose a consumers preferences for goods x & y can be described by the utility function u(x,y)=[AX^R+BY^R]^(1/R), where A & B are positive numbers & R is a negative or positive number.

a. show that as R approaches 0 this utility function is associated with the same preferences as the Cobb Douglas utility function.

b. show that as R approaches -infinity we have the case of perfect complements.

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Business Economics, Economics

Category:- Business Economics
Reference No.:- M91998204

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