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Unformatted text preview: increase in good X. What kind of good is X? A. Inferior. B. Normal. C. Necessity. D. A and C. E. B and C. Quiz Econ 100A, fall2010, lecture 6 slide# 5 Question 4: Cobb-Douglas preferences are represented by the utility function ܷ ݔ ଵ ݔ ଶ ൌ ݔ ଵ ఈ ݔ ଶ ఉ . The demand functions for the two goods are ݔ ଵ כ ଵ ǡ ଶ ǡ ܫ = ఈ ఈାఉ ή ூ భ and ݔ ଶ כ ଵ ǡ ଶ ǡ ܫ = ఉ ఈାఉ ή ூ మ . What are the cross-price elasticities of demand for these two goods? A. ఈ ሺఈାఉሻ భ and ఉ ሺఈାఉሻ మ respectively. B. െ ఈ ሺఈାఉሻ ூ భ మ and െ ఉ ሺఈାఉሻ ூ మ మ respectively. C. Zero for both goods. D. The answer cannot be determined without additional information...
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- Fall '08
- Microeconomics, b. c. d., C. D. E., A. B. C. D.