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Microeconomic Theory 11th Edition by Walter Nicholson,Christopher Snyder
Edition 11ISBN: 978-1111525538Microeconomic Theory 11th Edition by Walter Nicholson,Christopher Snyder
Edition 11ISBN: 978-1111525538 Exercise 3
As defined in Chapter 3, a utility function is homothetic if any straight line through the origin cuts all indifference curves at points of equal slope: The MRS depends on the ratio y/x.
a. Prove that, in this case,
is constant.
b. Prove that if an individual's tastes can be represented by a homothetic indifference map then price and quantity must move in opposite directions; that is, prove that Giffen's paradox cannot occur.
a. Prove that, in this case,
is constant.b. Prove that if an individual's tastes can be represented by a homothetic indifference map then price and quantity must move in opposite directions; that is, prove that Giffen's paradox cannot occur.
Explanation
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a)
It is required to be shown that if a ...
Microeconomic Theory 11th Edition by Walter Nicholson,Christopher Snyder
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