computes the demand functions implied by the three-good CES utility functiona. Use the demand function for x in Equation 6.32 to determine whether x and y or x and z are gross substitutes or gross complements.b. How would you determine whether x and y or x and z are net substitutes or net complements?

The Lagrangian technique can be used to calculate demand functions for these goods as If initially I 100, PX 1, PY 4, and PZ 1, then the demand functions predict- X* = 25 Y* = 12.5 Z* = 25. a.Two goods, Xi and Xj , are said to be gross…

titutes if and gross complements if equation 6.32 -PH = PZ = 0.25PY. They are gross complements. b.Xi and Xj are said to be net substitutes if and net complements if