Question: Will the budget constraint be active(or binding) at the optimum? Prove why. We provided sufficient condition for this. 2. Consider the following utility function (POINTS:

Will the budget constraint be active(or binding) at the optimum? Prove why. We provided sufficient condition for this.

2. Consider the following utility function (POINTS: 30) am) = (x' +y')"' (CES) where 3 s l and 5 all 0. It is called the constant elasticity of substitution (CES) function

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!

Mike Cichanowski founded Wenonah Canoe and later purchased Current Designs, a company that designs and manufactures kayaks. The kayak-manufacturing facility is located just a few minutes from the...

Is the sufficient condition for interior optimum satisfied? Show it. 2. Consider the following utility function (POINTS: 30) u(x, y ) = (x+8)1/ (CES) where 8 s 1 and 8 + 0. It is called the constant...

Exercise 1 Consider the following utility function, defined over the consumptions of L goods: u(x1,,xL)=v1(x1,,xL1)+v2(xL,a) where a is a scalar parameter. We denote the budget constraint l=1Lplxlw,...

Hi, can anyone solve this Lagrange and Kuhntucker question, the highlighted question 5, I have also given the solution for this. Can you solve the question in a simplified way. Thanks Exercise 25....

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...

help get the answers.. its a complete question 1. (10 points) Annie and David are painting their apartment. At the paint store, David says he prefers Canary Yellow to Bumblebee Yellow, Lime Yellow,...

Problem 1. Addictive goods. (23 points) In this exercise, we propose a generalization of Cobb- Douglas preferences that incorporates the concept of reference point. We use it to model the consumption...

8. Consider the utility function for the representative consumer: U(C, 1) = C04106 where C - consumption good and /= leisure. Suppose that representative consumer earns a real wage rate per labor...

2. Consider the following four consumers (C1,C2,C3,C4) with the following utility functions: Consumer Utility Function C1 u(x,y) = 2x+2y C2 u(x,y) = x^3/4y^1/4 C3 u(x,y) = min(x,y) C4 u(x,y) =...

let information be more of explanation 1. Differentiate the following functions: (a) f(x) = 6x 3 + 2x 2 x + 12. (b) f(x) = 4x (c) f(x) = e x (x 2). (d) f(x) = 4x 3 /(2x 2 x) (e) f(x) = ln(x 3 ). 2....

Eco nomics Human lCapital Model: Fieinterpretthe human capital growth model as follows: Suppose there are two groups of people in a country, the lowskilled and the highskilled, where the lowskilled...

We suggest that facilitators should focus primarily on the process and not the content of the meeting. Do you agree? Explain.

You have 17.5 g of oxalic acid, H2C204. What amount is represented by 17.5 g of oxalic acid? How many molecules of oxalic acid are in 17.5 g? How many atoms of carbon are in 17.5 g of oxalic acid?...

Under FASB ASC 8 3 0 , Foreign Currency Matters, when the cument rate method is used, how are trasslation adjustrents treated in the consolidated financial statements? Muthple Crolles Aa gatis or...

-> Let S = { a 1, a 2, a 3, a 4} and A = ( a 1, a 2, a 3, a 4), where 7. ) 7: (E) = () - () 0 1 3 1 a 1= a 2- 1 a 3= 4 a 4= 2 3 4 1. Determine whether AX = 6 is consistent, where X =(x1, x2, x3, T4)"...

5 Databases You are working as a consultant for the company "Boxes, Boxes and Boxes", that sells boxes. They want a database containing information about all their boxes. Each box has an id, a size,...

You have 50 toys you want to distribute among three children. One of many ways to do this is the following A = 15 toys B =25 toys C = 10 toys How many ways to do this altogether? How many ways to do...

The opening balances on 1 January in the books of Gladstone Ltd included the following: Purchase Ledger Control Account Sales Ledger Control Account 313,800 530,800 During the year to 31 December,...

interracial marriages in pakistan

3. If so, what should it cover, and how would you suggest it deal with a situation such as the one with the errant counter people?

2. Should a disciplinary system be established at Carter Cleaning?

3. Do you think the idea of paying recruiters like Angelo per recruit might actually backfire, and if so how?