Choose c₁ and c₁₂ to maximize U(c₁, c²) = ln ((c²)ª³ (c²)¹¯ª³) for j = 1,2 subject to: pie² + e² - pic - c2 = 0. Let a¹ = .40, a² = .60, e₁ = 8, e₁ = 6, e² = 14 and epic e² = 18. (a) Set up Lagrangian £ = In ((ci)" (ci)+¯a³) + \\me{ + e − mic{ − c)] for j = 1,2 (b) Take FOCS (c) Set equal and find c (p₁) and 2 (p1) - (d) Substitute (p₁) and c2(p₁) into market clearing condition c₁ + c² = e₁ + e to find Pi (e) Using p solve for optimal consumption JU() ac (f) Check MRS; = = is the same for j = 1,2 oU) ac
Choose c₁ and c₁₂ to maximize U(c₁, c²) = ln ((c²)ª³ (c²)¹¯ª³) for j = 1,2 subject to: pie² + e² - pic - c2 = 0. Let a¹ = .40, a² = .60, e₁ = 8, e₁ = 6, e² = 14 and epic e² = 18. (a) Set up Lagrangian £ = In ((ci)" (ci)+¯a³) + \\me{ + e − mic{ − c)] for j = 1,2 (b) Take FOCS (c) Set equal and find c (p₁) and 2 (p1) - (d) Substitute (p₁) and c2(p₁) into market clearing condition c₁ + c² = e₁ + e to find Pi (e) Using p solve for optimal consumption JU() ac (f) Check MRS; = = is the same for j = 1,2 oU) ac
Chapter2: Mathematics For Microeconomics
Section: Chapter Questions
Problem 2.6P
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d,e and f not typed please! foc in second pic
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