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1. (50 marks) Consider the Robinson Crusoe (RC) model discussed in class where the following two equations characterize the optimal choice (c*, (*): u (c,

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1. (50 marks) Consider the "Robinson Crusoe (RC)" model discussed in class where the following two equations characterize the optimal choice (c*, (*): u (c, h - n) = uc(c, h - n) Afr(n) (1) c = Af(n) where TFP A is exogenous. Assume that f(n) = n (ie the underlying production function is given by y - An). Also assume that the utility function u(c, l) is twice differentiable, increasing in both arguments, and strictly quasiconcave. (a) (20 marks) Using f(n) = n, totally differentiate (1). (b) (10 marks) Again using f(n) = n, totally differentiate (2)

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