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For a cobb- douglass function, if the price of X increases, share of X on expenditure...

For a cobb- douglass function, if the price of X increases, share of X on expenditure will increase. True or False Explain very brief

explain wheather the answer is True or false
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Answer #1

For a cobb- douglass function, expenditues on the goods are constant proportion of income. For this type of function, the income effect exactly cancels out the substitution effect. Any increase in the price of good X will not increase the expenditure concurrent on it.

So, Statement is FALSE.

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