Question: Could you please explain the first two problems? How can I write the constrains of (100-x)^0.25(100-y)^0.25>u? Thank you! Consider the Pareto Problem in a small
Could you please explain the first two problems? How can I write the constrains of (100-x)^0.25(100-y)^0.25>u? Thank you!
Consider the Pareto Problem in a small economy, where agents A and B must split 100 units of goods x and y. Each Pareto Optimal allocation can be found for some utility level u(0,100) of agent B, solving the following problem for agent A. maxx,yx1/4y1/4s.t.x,y0,(100x)1/4(100y)1/4u (a) Write the Kuhn Tucker conditions for this problem. (b) Are these conditions sufficient? (c) Solve the Pareto Problem. (d) Verify the Envelope Theorem with respect to u:uV(u)=uL(u). Consider the Pareto Problem in a small economy, where agents A and B must split 100 units of goods x and y. Each Pareto Optimal allocation can be found for some utility level u(0,100) of agent B, solving the following problem for agent A. maxx,yx1/4y1/4s.t.x,y0,(100x)1/4(100y)1/4u (a) Write the Kuhn Tucker conditions for this problem. (b) Are these conditions sufficient? (c) Solve the Pareto Problem. (d) Verify the Envelope Theorem with respect to u:uV(u)=uL(u)
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