Answer to Question #146955 in Microeconomics for Najeeb ULLAH

Question

u(x1, x2) = (x1^p + x2^p)^1/ρ
1. Check the Slutsky equation in its four components.
2. What is different with respect to the case of a Cobb-Douglass utility?
3. Show that in the limit ρ → 0 the CES utility converges to a
Cob-Douglass utility

Answer 1

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