Question: Explain how I would find the optimal future and current consumption for a logarithmic utility function and again for a utility function with perfect substitutes.

Explain how I would find the optimal future and current consumption for a logarithmic utility function and again for a utility function with perfect substitutes.

Step by Step Solution

★★★★★

3.42 Rating (146 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

To find the optimal future and current consumption for different utility functions we need to maximi... 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!

Parents, Children and the Degree of Substitutability across Time: Consider again exactly the same scenario as in exercise 16.6. A: This time, however, suppose that parent and child tastes treat...

Wallace and Brace CPA assign a partner to screen and recommend (or decline) potential clients prior to acceptance. Discuss at least 4 specific issues which should have been considered prior to...

This exercise reviews some concepts from earlier chapters on consumer theory in preparation for exercise 19.5. A. Consider an individual saver who earns income now but does not expect to earn income...

Question 1 0 out of 2.5 points Assume that the price of commodityA is $20, the price of commodity B is $10, and that the consumer is currently spending all available income. At the consumer's current...

explain all 1. (55 points) Egbert consumes only axes (X) and mead (Y ). His utility function is U = XY , his income is I and the prices of axes and mead are pXand pY respectively. (a) What is...

&+ help here plss. 9. One-shot DMP model (inspired by Albrecht, Navaro and Vroman (2010]) Time: One period Demography: A unit mass continuum of workers and a larger mass of firms who can create...

fi 4.3. Risk premium: A businesswoman runs a firm worth CHF 100,000. She faces some risk of having a fire that would reduce her net worth according to the following three states, i = 1,2,3, each with...

Econ homework. [ell Describe the function VI\1. Monetary neutrality.r implies that monetary policy.r has no effect on output. 2. If recessions were an eicient response to changes in productivity. we...

Parmacheenee Belle's entire common stock portfolio ($500,000) is allotted to an index fund tracking the Standard & Poors 500 index. The expected rate of return on the index is 9.5% and the standard...

An endowment economy only exists for three periods (period 1, period 2, and period 3). A representative household values consumption each period (C1, C2, C3). In the textbook/classroom example, we...

National Investor Group is opening an office in Portland. Fixed monthly costs are office rent ($8,500), depreciation on office furniture ($2,000), utilities ($2,100), special telephone lines...

Explain the difference between macroeconomics and microeconomics. How are these two fields related?

Evaluate the following limit: , lim x - - 1 - 3 x 4 x 2 - 6 1 1 x - 3 x 2 - 1 1 6 - 4 3 - 0

Elise is using alcohol to self-medicate. She suffers from debilitating depression, but since adolescence she has turned to alcohol and street drugs to alleviate the symptoms of this depression rather...

Use LabVIEW with the Control Design and Simulation Module and MathScript RT Module to do the following: Modify the CDEx Nyquist Analysis.vi to obtain the range of K for stability using the Nyquist...

A jet transport with a landing speed of 200 km/h reduces its speed to 60 km/h with a negative thrust R from its jet thrust reversers in a distance of 425 m along the runway with constant...

A closed cylindrical tank of water ( = 1000 kg/m 3 ) is rotated about its horizontal axis as shown. The water inside the tank rotates with the tank (V = r ). Derive an equation for dp/dz along a...

We can make the quick-select algorithm deterministic, by choosing the pivot of an n-element sequence as follows: Partition the set S into n/5 groups of size 5 each (except possibly for one group)....

Facilitation payments are large payments that enable setting up new businesses in foreign lands. True False

The tax analyzed in exercise 3.15 is a proportional wage tax. The U.S. federal income tax, however, is progressive. This means that the average tax rate one pays increases the more wage income is...

Suppose that you have 60 hours per week of leisure time and that you can earn $25 per hour in the labor market. Part of the reason you do not have more time to work is that you need to do a variety...

A: Suppose a firm produces x using a technology that emits pollution through smokestacks. The firm must ensure that it has sufficient pollution vouchers v to emit the level of pollution that escapes...

Business Week recently reported that L. G. Philips LCD Co. would complete a new factory in Paju, South Korea. It will be the worlds largest maker of liquid-crystal display panels. The arrival of the...

The following table exhibits base salary data obtained from a survey of over 170 benchmark positions, including finance positions. It reports the salaries of a sample of 25 chief finance officers for...

Suppose a random sample of 137 households in Detroit was taken as part of a study on annual household spending for food at home. The sample data are contained in the file Detroit Eats. a. For the...