Question 2 Suppose that in a two commodity world the

Last updated: 1/7/2024

Question 2 Suppose that in a two commodity world the consumer s utility function takes the form 1 p u x x a a x This utility function is known as the constant elasticity of substitution CES utility function 1 Show that the CES utility function is homothetic 2 Show that as p 0 for every pair 2 22 the marginal rate of substitution between goods 1 and 2 converges to the MRS of the generalized Cobb Douglas utility function 3 Show that as p for every pair the marginal rate of substitution be tween goods 1 and 2 converges to the MRS of the Leontief utility function