Suppose your tastes over consumption and leisure have constant elasticity of substitution. I observe that, when your wage went up, you continued to work the same number of hours. From this, I can conclude that you have Cobb-Douglas tastes.
Answer the following statement true (T) or false (F)
True
Rationale: Cobb-Douglas tastes are CES tastes with elasticity of substitution of 1 -- which is what is required for substitution and wealth effects to be exactly offsetting in this case.
Economics
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