utility function: Suppose we have a household with the following lifetime U = In Ct +...
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utility function: Suppose we have a household with the following lifetime U = In Ct + ßln Ct+1 (a) Create an Excel file to compute indifference curves numerically. Suppose that 30.95. Create range of values of C++1 from 0.5 to 1.5, with a space of 0.01 between (i.e. create a column of potential C++1 values ranging from 0.5, 0.51, 0.52, and so on). For each value of Ct+1, solve for the value of C, which would yield a lifetime utility level of U = 0. Plot this. (b) Re-do part (a), but for values of lifetime utility of U = -0.5 and U = 0.5. (c) Verify that "northeast" is the direction of increasing preference and that the indifference curves associated with different levels of utility do not cross. utility function: Suppose we have a household with the following lifetime U = In Ct + ßln Ct+1 (a) Create an Excel file to compute indifference curves numerically. Suppose that 30.95. Create range of values of C++1 from 0.5 to 1.5, with a space of 0.01 between (i.e. create a column of potential C++1 values ranging from 0.5, 0.51, 0.52, and so on). For each value of Ct+1, solve for the value of C, which would yield a lifetime utility level of U = 0. Plot this. (b) Re-do part (a), but for values of lifetime utility of U = -0.5 and U = 0.5. (c) Verify that "northeast" is the direction of increasing preference and that the indifference curves associated with different levels of utility do not cross.
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To create the Excel file to compute indifference curves numerically for the given lifetime utility function we need to follow the steps outlined below ... View the full answer
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