Optional, using calculus for marginal analysis.

In the Cobb-Douglas utility function presented in class, the exponents on the quantities of goods (b and 1-b) were assumed to be between 0 and 1 and sum to 1. b represents the relative taste (as a share of 1) of the consumer for the first good, and so appears in each demand function.

These lecture notes are very similar, but use a slightly more general form of the function in which the exponents (a and b) are between 0 and 1 but may not sum to 1. Here a/(a+b) represents the relative taste of the consumer for the first good.

This supplements readings assigned in the document under Activities.

Another supplement.

Another supplement.

How does this relate to economics?