Question #81489

Consider the utility function of the form:

U(x_1,x_2 )=〖(α_1 x_1^ρ+α_2 x_2^ρ)〗^(1/ρ)

Where ρ ≤ 1. Show that the demand curve is:

x_1^M=((α_1⁄p_1 )^σ M)/((α_1^σ p_1^(1-σ)+α_2^σ p_2^(1-σ) ) )

If σ is 1/(1− ρ).

U(x_1,x_2 )=〖(α_1 x_1^ρ+α_2 x_2^ρ)〗^(1/ρ)

Where ρ ≤ 1. Show that the demand curve is:

x_1^M=((α_1⁄p_1 )^σ M)/((α_1^σ p_1^(1-σ)+α_2^σ p_2^(1-σ) ) )

If σ is 1/(1− ρ).

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