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MrsAngelD MrsAngelD
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6 years ago
Recall that the Cobb-Douglas Utility function U(X,Y) = XaY1-a has the unusual property that the demand for each good depends only on its own price. Therefore, a consumer will always allocate the same proportion of income to each good. Specifically, the demand for X is
      X* = aI/px
where I is income and px is the price of X. 
a.   What is the price elasticity of demand for X?
b.   What is the direction of the income effect on X of an increase in px?
Textbook 
Microeconomics: Theory and Applications with Calculus

Microeconomics: Theory and Applications with Calculus


Edition: 4th
Author:
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forrestforrest
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6 years ago
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MrsAngelD Author
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6 years ago
Correct Slight Smile TY
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This helped my grade so much Perfect
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