If tastes are Cobb-Douglas, they can be represented by a utility function that is homogeneous of degree k where k can take on any positive value.

Question

Quizplus · Accepted Answer

This statement is true. A Cobb-Douglas utility function is homogeneous of degree k, where k represents the elasticity of substitution between goods in the function. The value of k can take on any positive value.

If Tastes Are Cobb-Douglas, They Can Be Represented by a Utility