Solve the problem of the Cobb-Douglas utility function of Chapt... | Filo

in example 41 we looked at the cobb douglas utility function uxyxay1 a where 0a1 this problem illustrates a few more attributes of that function a calculate the indirect utility function for 36322

In a pure exchange economy with two goods, G and H, the two traders have Cobb-Douglas utility functions. Amos' utility is Ua=(Ga)^α(Hα)^1-α and Elise's is Uc=(Gc)^β(Hc)^1-β . What are their marginal rates of substitution? Between them, Amos and Elise own 120 units of G and 90 units of H . Thus, if Amos has Ga and Ha, Elise has Ge=120-Ga and He=90-Ha . Solve for their contract curve. | Numerade