Question

IMPORTANT: I realize that the answer/walkthrough is posted. What I need help with is the point where the derivative of (K/L) is being taken with respect to MRTS. At that point on I'm totally lost in what's going on. Please give a very detailed explanation of how the derivative of (K/L) is taken with respect to MRTS. I have no idea where the -1/p came from or where the p+1 exponent came from. Please show me in a detailed way how that happens.

IMPORTANT: I realize that the answer/walkthrough is posted. What I need help with is the point where the derivative of (K/L) is being taken with respect to MRTS. At that point on I'm totally lost in what's going on. Please give a very detailed explanation of how the derivative of (K/L) is taken with respect to MRTS. I have no idea where the -1/p came from or where the p+1 exponent came from. Please show me in a detailed way how that happens.

A) Suppose that your MRTS MRTS- What is the elasticity of substitution? "D (Mets) (Eo 癖 の er ·喉) MKTS KL 丄 ろ

Answer 1

It happens because when we take denominator with a power above in the nominator it's power get opposite sign.and vice versa. Look at the image for more detailed explanation.

laat Sub This is the poamula to calculate gt is omgnally giuen in and we MRTS Nou taking doiaiuest KI

P-T Since in th formula we have- will agin seciprocaki , oc CFI (FIU al en aboue /L