Question: Hi, I need help with this please Let's focus now on the problem of a single agent our OLG economy. As usual, she receives an

Hi, I need help with this please

Let's focus now on the problem of a single agent our OLG economy. As usual, she receives an endowmenty= 5when young and nothing when old. The agent has the option to buy 2 assetsaandbin order to save for the future (there is no money). Assetaandbrates of return arera, rbrespectively. She has a typical log utility:u(c1, c2) =log(c1) +log(c2).

State the agent's budget constraints.
Suppose thatra= 2, rb= 1. What is the optimal demand for assetsaandb?
What is the condition onraandrbto make the agent accept to carry both assets?
Ifrb= 1and the agent controls the returns of assetasuch thatraa= 2a1/2, what is the the optimal demand foraandb?

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

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!

Problem 2 - Portfolio Choice Let's focus now on the problem of a single agent our OLG economy. As usual, she receives an endowment y = 100 when young and nothing when old. The agent has the option to...

Question1: Let's focus now on the problem of a single agent our OLG economy. As usual, she receives an endowment y = 100 when young and nothing when old. The agent has the option to buy 2 assets (1...

ECON 4721, Money & Banking Reference: Modeling Monetary Economics (2016, Fourth Edition, Cambridge University Press) by Bruce Champ, Scott Freeman and Joseph Haslag. Question 3 - Portfolio Choice....

here are economics questions help me answer them all.its a complete kindly help mi.... Money in the Utility Function (Final, 2005) Assume that consumer's utility in period / depends on consumption...

What are emergent themes for the below comments. The best part is host did not interrupt him even once. great job. Ok, I've destroyed my phone, what's next? I don't know the interviewer, but he did a...

Entrepreneurship and innovation The keys to global economic recovery invention Executive summary At a time when entire economies and industries are reeling from the nancial crisis, business leaders...

my question: The related case is put below with images. Can you describe trivago's organization design since 2010 by considering its structural dimensions such as formalization, specialization,...

&+ 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...

Hi, This subject is financial accounting, here is a short essay type question, approximately 5 paragraphs. ''Drawing on private interest theory, what powers do you believe the Australian Accounting...

look into the transcription of the videos that we coded for the Dominance project and identify if there are any errors (grammar and spelling and etc): 1673015005057.mp4 Baseline 181 Baseline181 Hi,...

Frito-Lay, the multi-billion-dollar snack food giant, produces billions of pounds of product every year at its dozens of U.S. and Canadian plants. From the farming of potatoesin Florida, North...

Seal-best is a company that handles a full line of dairy products in central and southern Ohio. It produces both fresh dairy products and such storable products as powdered milk and cheese. Seasonal...

Suppose you were to take out a loan to paid off in 5 years making quarterly payments. How many compounding periods are there in one year and how many total payments are you expected to make? Question...

Husband and wife are negotiating a separation of their property during a divorce. Husband is an executive with a six-figure income. Wife has always stayed at home and raised the children. The...

Get married, do not wait for me

Do not pay him, wait until I come

Do not get married, wait until I come, etc.