Question: Consider a simple one-period, closed-economy model where the representative consumer has utility function U(C,l) = C1/2l1/2 and has h available hours to divide between work

Consider a simple one-period, closed-economy model where the representative consumer has utility function U(C,l) = C1/2l1/2 and has h available hours to divide between work and leisure. The representative firm has technology given by Y = zK1/3N2/3 There is a government that sets its expenditure level at a value G0 ≥ 0. a. Does this utility function satisfy the Inada Conditions? Show your answer. b. Define a competitive equilibrium for this economy. Explain it using a suitable graph. c. Find the competitive equilibrium values (C*, l*, N*, T*, Y*, w* ) given parameters h = 14, z = 1, K = 15625, and G0 = 0.

Step by Step Solution

★★★★★

3.50 Rating (153 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

AlCording to the data hol corgider a mple onepeniod cloge... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Economics Questions!

A small free clinic has a single doctor who sees patients between 8:00 a.m. and noon. She spends 6 to 14 minutes (an average of 10) with each patient and so can theoretically see 6 patients per hour...

Consider an economy with one representative consumer and one representative firm. There is no government (no taxes). The consumer's utility function is U = log(c)-N where c is consumption and N is...

Your utility function is U = ln(2C) where C is the amount of consumption you have in any given period. Your income is $40,000 per year and there is a 2% chance that you will be involved in a...

A firm has a monthly production function where L is hours of labor per month and K is square feet of manufacturing space. The marginal product of labor is The marginal product of capital is a. If the...

Consider a simple time series model where the explanatory variable has classical measurement error: where ut has zero mean and is uncorrelated with x*t, and et. We observe yt and xt only. Assume that...

Create a Web page named magic.html that simulates the functionality of a Magic 8 Ball. Your page should look similar to the one in Figure 9.10, with a text box for entering a yes-or-no question, and...

Social Security payments to the elderly are adjusted every year in the following way: The government has in the past determined some average bundle of goods consumed by an average elderly person....

Let us have an economy that lives only for 2 periods. The representative household has a utility function that values consumption goods and leisure for any period as follows u(c, n) = ln(c) + (1 )...

Error Corrections you have been assigned to examine the financial statements of Zarle Company for the year ended December 31, 2010. You discover the following situations. 1. Depreciation of $3,200...

Generally, the value chains involved in providing a given product or service can be from multiple industries that can be interconnected in complex ways. One example is the auto industry where the...

Value Chain for Financing Auto Purchases Required Consider the comprehensive value chain in Problem 2-57 and complete a value chain for the financing portion of the value chain only. Use a value...

A company aims to forecast the monthly demand for one of its product families. The table below the demand data for the previous months: Month 1 2 3 4 5 6 7 8 9 10 11 12 Demand 390 373 354 342 345 310...

The output efficiency condition applies both when firms produce different products (like food and housing), and when they produce the same product. For example, suppose firms A and B both produce...

if the risk free rate is 2 . 2 percent what is the amount of risk premiumed on a us treasury bill

Each student should choose an organization with which she/he is familiar, such as the place of employment, business patronized, or other situation and describe how that organization either does or...

Berrian, sales manager of Allmond Arenas, is checking to see if there is any relationship between promotional costs and ticket revenues at the sports stadium. She obtains the following data for the...

XYZ Co has 2,500 shares of stock outstanding with a par value of $1.50 per share and a market value of $7.5 per share. The balance sheet shows $22,000 in the common stock account, and $52,500 in the...

guitar f Mthunzi Pty (Ltd) is a company that solls Mithunzi's Financial Statements throughout the country.. gre Prepared in accordance with International Finop(Ja/ Reporting Standards (19RS). The...

What is the maximum safe amount of refrigerant for a recovery cylinder with a water capacity of 50 lb, holding a refrigerant with a specific gravity of 0.9? Select one: A. 50 lb 0.8 = 40 lb B. 50 lb...

Consider a simple one-period, closed-economy model where the representative consumer has utility function U(C,l) = C 1/2 l 1/2 and has h available hours to divide between work and leisure. The...

26) Consider the following one-period, closed-economy model. Utility function over consumption (C) and leisure (L) U(C,L) = C^1/2L^1/2 Total hours: H = 40 Labour hours: NS = H - L Government...

consider Consider the following one-period, closed-economy modelt Utility function over consumption (C) and leisure (L) 1 1 U(C,L) = c 3 L 3 Total hours: H = 40 Labour hours: NS = H L Government...

Question 1: Consider the following one-period, closed-economy model. Utility function over consumption (C) and leisure (L) U(C, L) = C 1/4 L 3/4 Total hours: H = 40 Labour hours: N S = H - L...

Consider the following one-period, closed-economy model. Utility function over consumption (C) and leisure (L) 1 U(C,L) = CSL 3 Total hours: H = 40 Labour hours: NS = H -L Government expenditure = 10...

Consider a simple one-period binomial framework, where a stock currently trading at $50 per share may either increase in value by 3% or decrease in value by 3% (simple). This stock does not currently...