Consider the Utility Function $u \left( x _ { 1 } , x _ { 2 } \right) = \left( \alpha x _ { 1 } ^ { - \rho } + ( 1 - \alpha ) x _ { 2 } ^ { - \rho } \right) ^ { - 1 / \rho }$

question 12

True/False

Consider the utility function $u \left( x _ { 1 } , x _ { 2 } \right) = \left( \alpha x _ { 1 } ^ { - \rho } + ( 1 - \alpha ) x _ { 2 } ^ { - \rho } \right) ^ { - 1 / \rho }$ .If $\rho = 2$ ,the elasticity of substitution is equal to $\frac { 1 } { 2 }$ .

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Definitions:

Imperfect Competition

A market structure in which firms have some control over the price of their products, due to factors like product differentiation, fewer sellers, or barriers to entry.

Standardized Products

Goods or services that have uniform characteristics and quality, regardless of the producer or provider.

Pure Monopoly

An economic instance where only one supplier provides a unique product or service, facing no competition and thus controlling price and supply.

Standardized Product

Goods that are uniform in quality and specifications across producers and locations, making them interchangeable.