erasucity of SUD U(91-92) = (a +92) Show that there is a positive monotonic transformation such that there is an equilivalent utility function (one with the s U(91-92) =a +9 There is a positive monotonic transformation such that there is an equilivalent utility function because OA (a +92) =a² + a². +a)'
erasucity of SUD U(91-92) = (a +92) Show that there is a positive monotonic transformation such that there is an equilivalent utility function (one with the s U(91-92) =a +9 There is a positive monotonic transformation such that there is an equilivalent utility function because OA (a +92) =a² + a². +a)'
Chapter4: Utility Maximization And Choice
Section: Chapter Questions
Problem 4.13P
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Transcribed Image Text:K
Tiffany's constant elasticity of substitution (CES) utility function is
U(91-92) = (a +92)
Show that there is a positive monotonic transformation such that there is an equilivalent utility function (one with the same preferences ordering)
U(91-92) =a +92
There is a positive monotonic transformation such that there is an equilivalent utility function because
OA
B.
O C.
OD.
OE
1
(ai +92) * =q+ + 2
(af + a) <af
ah + a² > (a² + a) ³ only wa+h+a+2> (a +² +a+g) ²
af + a²>q* f+q* £ ony # (af +ah) ³ > (a •{• a•h) ²
rif
2)
(a +42 ) ² >9² +92.
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