Hard to find much explanation as to why we generally use CD functions so often.
My understanding is that it is usually well behaved when used for utility functions and preferances, since it is
- monotonic (utility increases when any input increases)
- homogenous (constant MRS for a fixed ratio of 2 goods, or that utility curves move out radially)
Also, are there actual real world uses of CD, e.g. are they really still used in production for manufacturing companies? What is the strongest purpose of CD?
Thank you so much!