Answer to Question #102432 in Microeconomics for Daud petro

Question

Y=X^1/5Z^4/5.what is expansion path equation?

Answer 1

If Y=X^1/5Z^4/5, then expansion path equation is:

$\frac{MPx}{MPz} = \frac{Px}{Pz},$

$MPx = Y'(x) = 0.2(Z/X)^{4/5} ,$

$MPz = Y'(z) = 0.8(X/Z)^{1/5},$

$\frac{0.2(Z/X)^{4/5}}{0.8(X/Z)^{1/5}} = \frac{Px}{Pz},$

$0.25(\frac{Z}{X})^{4/5}= \frac{Px}{Pz}.$