Deriving Marshallian Demand Functions from Generalised Cobb Douglas Utility Function

Derivation of Marshallian Demand Functions from Utility Function

Learn how to derive a demand function form a consumer's utility function. In this problem, U = x^a*y^b

This video introduces the Cobb-Douglas utility function for two goods and demonstrates some of its properties.

I demonstrate how to compute marginal rate of substitution for Cobb Douglas utility. I use the resulting expression to show why Cobb Douglas indifference curves have constant slope along rays out of the origin.

I also demonstrate how to solve for consumer demand using the Cobb-Douglas utility function. After deriving Cobb-Douglas demand, I show that the alpha share parameter in Cobb-Douglas utility functions actually represents the consumer's expenditure share on that good.

This video uses calculus to compute MRS, but after that, the rest is just algebra. If you are a viewer who doesn't know calculus, you can take me at my word, skip the computation of MRS, and the rest of the video can still be worthwhile.

Economics Playlist

Derivation of Marshallian Demand Functions from Utility Functions:    • Derivation of Marshallian Demand Func...  

Derivation of Marshallian Demand Functions from Utility Functions (II):    • Derivation of Marshallian Demand Func...  


Derivation of Hicksian Demand Functions from Utility Functions:
   • Derivation of Hicksian Demand Functio...  

Deriving Marshallian and Hicksian Demand Functions (compensated and uncompensated demand):
   • Deriving Marshallian and Hicksian Dem...  

Derivation of a Generalised (n-good) Marshallian Demand Function from Utility Function.
   • Derivation of a Generalised (n-good) ...  

Deriving Hicksian (compensated) Demand Using the Slutsky Equation:
   • Deriving Hicksian (compensated) Deman...  

Deriving Marshallian Demand From a Stone-Geary Utility Function:
   • Deriving Marshallian Demand from Ston...  

I hope the video helps :)