Lewis Has Preferences Given by the Cobb-Douglas Utility Function U(q₁,q₂)=

question 67

Essay

Lewis has preferences given by the Cobb-Douglas utility function U(q₁,q₂)= q₁^aq₂^1-a,where a > 0.Show that Lewis's total amount spent on each good,does not change with the prices.

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Definitions:

Administrative Expenses

Administrative expenses are the costs related to the general operation of a business, including salaries of non-production staff, office supplies, and utilities.

Tenant-Days

A metric used in real estate or lodging industries, calculated by multiplying the number of tenants by the number of days they occupied a space.

Planning Budget

A budget prepared for a specific period in the future that serves as a plan for the company's operations and financial activities.

Budgeting Formulas

Mathematical expressions or equations used to forecast and manage financial resources by estimating incomes and expenditures.