ECO102 Lecture Notes - Lecture 12: Level Set
Document Summary
Euler"s theorem: if f is hod(k) and differentiable, then and so the elasticity of scale is equal to the degree of homogeneity of f. Elasticity of substitution where and so that or. 3) (minimum / perfect complements) (linear / perfect substitutes) How do we get the results for the elasticity of substitution in examples 2 and 3? (constant elasticity of substitution) (r cannot exceed 1) As r --> 1, the ces function approximates the linear function and the above ratio tends to infinity. As r --> -oo, the ces function approximates the minimum function and the above ratio tends to zero. And as r --> 0, the ces function approximates the cobb-douglas function and the above ratio tends to. Ces level curve, f(x) =1, with r = 0. 9. Ces level curve, f(x) =1, with r = 0. 5. Ces level curve, f(x) =1, with r = -5.
