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Winter 2011
PROBLEM SET II
(for Friday, January 14)
1.
(This is problem 1 at the end of chapter 3.)
Show that the following functions are homogeneous
and verify that Euler's theorem holds.
(a)
2
12
1
2
(, )
fxx
xx
(b)
2
1
2
2
xx x
(c)
22
1
2
1
2
(, ) (
)
/
(
2 )
x x
x
x
(d)
1
1
2
2
/
(
)
x xx x
(e)
1
x
2.
(This is problem 3 at the end of chapter 3.)
Let
1/
1
2
(, ) [
(
1 ) ]
A x
x
.
Show that
is homogeneous of degree 1.
This is the equation of the constant elasticity of
substitution (or CES) production function.
3.
(This is problem 4 at the end of chapter 3.)
Let
[(, )
]
Fhxx
where
h
is homogeneous
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This note was uploaded on 04/04/2011 for the course ECON 400 taught by Professor Ellis,g during the Spring '08 term at University of Washington.
 Spring '08
 Ellis,G

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