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Topic: Chapter 3, Page 123, and Exercise 3.15
Conf: Corrections and Errata, Msg: 2575
From: Bettina Klaus (bklaus1@unl.edu)
Date: 11/29/2000 08:38 PM

Chapter 3, Page 123, and Exercise 3.15 Bettina Klaus bklaus bklaus1@unl.edu It seems counter intuitive to me that a CES functions with possibly unequal weights (the alphas) converges to a simple Leontief function along the 45 degree line (for two dimensions) when rho goes to -infinity. My intuition was that the limit on the top of page 123 was correct and that the alphas determine the optimal input ratio. Could you explain, why this is wrong?