Show that the utility function is homothetic if and only if all demand functions are...
Question:
Show that the utility function is homothetic if and only if all demand functions are multiplicatively separable in price and income and of the form {eq}x(p,y) = \phi(y)x(p,1). {/eq}
Utility Function:
In economics, the aforementioned term is associated with the consumer preferences for products and services wherein consumers will prefer a bundle of products and services that give them a higher level of satisfaction.
Answer and Explanation: 1
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View this answerConsider the given function;
{eq}x (p, y) = \phi (y) x (p, 1) {/eq}
We know that the given function will become homothetic if the ratio of the...
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