How the solution solves to get [ C = ] as shown in the picture? Exercise 1
Fantastic news! We've Found the answer you've been seeking!
Question:
How the solution solves to get [ C = ] as shown in the picture?
Transcribed Image Text:
Exercise 1 1. The household's problem is: subject to: The Lagrangian is: C + 10 max C+11c C1,C2 C 1+ r* 10 L = G++1 [0 11 The first order conditions are: Q - T+ 1 C: C/ 1 10 211 C: C = T1 + C = -1/2 = Q2-T2 1+r* Q-12-C-C2] 1+r* 1+r* Substituting r* = 0.1 and combining these gives C = C2. Using the intertemporal budget constraint, Q = Q2 = 10, we can solve for C = C = C. 1+r* 10-T+ 10-T 1.1 (1+1) (1) Exercise 1 1. The household's problem is: subject to: The Lagrangian is: C + 10 max C+11c C1,C2 C 1+ r* 10 L = G++1 [0 11 The first order conditions are: Q - T+ 1 C: C/ 1 10 211 C: C = T1 + C = -1/2 = Q2-T2 1+r* Q-12-C-C2] 1+r* 1+r* Substituting r* = 0.1 and combining these gives C = C2. Using the intertemporal budget constraint, Q = Q2 = 10, we can solve for C = C = C. 1+r* 10-T+ 10-T 1.1 (1+1) (1)
Expert Answer:
Answer rating: 100% (QA)
To solve for the optimal consumption levels C and C we need to use the firstorder condi... View the full answer
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
Posted Date:
Students also viewed these finance questions
-
The RC charging circuit in a camera flash unit has a voltage source of 305 V and a capacitance of 126 F. a) Find its resistance R (in ohms) if the capacitor charges to 90.0% of its final value in...
-
123 Compare the purely graphical properties of these two notations, and the ways in which the graphical properties of each display correspond to the information structure being defined. Describe...
-
In a Hopfield neural network configured as an associative memory, with all of its weights trained and fixed, what three possible behaviours may occur over time in configuration space as the net...
-
In Exercises, find the limit. lim 5 x 0-x 813 X
-
Enter the slots.html text from Figure 11.10 into a new Web page, then load the page in the browser to verify that it behaves as described. Modify your page so that it simulates a slot machine, with...
-
Carreras Café is a Spanish restaurant in a college town. The owner expects that the number of meals served in June will be 40 percent below those served in May, because so many students leave...
-
Victoria Exports. A Canadian exporter, Victoria Exports, will be receiving six payments of 12,000, ranging from now to 12 months in the future. Since the company keeps cash balances in both Canadian...
-
FIFO method, assigning costs (continuation of 11-21). For the data in Exercise 17-19, use the FIFO method to summarize total costs to account for, calculate cost per equivalent unit for direct...
-
Marshall Tucker Enterprises is considering an investment in a production equipment upgrade. The cost is expected to be $700,000. The IRS depreciation life is 7 years but the firm expects to sell the...
-
Jeff Harris owns an appliance store. On January 1 he borrowed 50,000 dollars for improvements to the store from BBT, who took a security interest in all of the equipment and fixtures in the store. On...
-
2000 ygoto Equity method journal entries with intercompany sales of inventory An investor owns 25% of an investee, and accounts for its investment using the equity method. Ae beginning of the year,...
-
On Monday, April 5, 2010, just before 3:00 in the afternoon, miners at Massey Energy Corporation's Upper Big Branch coal mine in southern West Virginia were in the process of a routine shift change....
-
1.Determine the amount of gain that Taxpayers (a married couple filing a joint return) must include in gross income in the following situations: (a)Taxpayers sold their principal residence for...
-
We can differentiate between three different types of inclusion. What type of inclusion issue is a hand when our employees say I feel I ' m not valued here?
-
The Reddington Medical Group was a two-hundred-and-twenty-person multispecialty group practice in the northeast. Established for over sixty years, the group had evolved to be a well-respected...
-
Bads, Inc., sells an average of 1 , 0 0 0 1 , 0 0 0 food processors each year. Each order for food processors placed by Bads costs $ 5 0 . 5 0 . The lead time is one month. It costs $ 1 0 1 0 to hold...
-
Critical Thinking Problem 10.1 (Static) Payroll Accounting LO 10-2, 10-3, 10-4, 10-5, 10-6, 10-7 Delta Company pays salaries and wages on the last day of each month. Payments made on December 31,...
-
You are standing at x = 9.0 km and your assistant is standing at x = 3.0 km. Lightning bolt 1 strikes at x = 0 km and lightning bolt 2 strikes at x = 12.0 km. You see the flash from bolt 2 at t = 10...
-
Professor Patricia (Patty) Pate is retired from the PalmSprings Culinary Arts Academy (PSCAA). She is a single taxpayer and is 68 years old. Patty lives at 98 Colander Street, Henderson, NV 89052....
-
For each of the following situations, indicate whether the taxpayer(s) is (are) required to file a tax return for 2012. Explain your answer. a. Helen is a single taxpayer with interest income in 2012...
-
Russell (age 50) and Linda (age 45) Long have brought you the following information regarding their income and expenses for the current year. Russell owns and operates a landscaping business called...
-
In your view, what are the possible reasons behind a merger? And a demerger?
-
Ignoring tax issues, would a shareholder with a 51% controlling interest in a company be better off buying another company or merging with it?
-
Is the dilution of EPS that follows all mergers generally greater or less than that which follows a standard capital increase?
Study smarter with the SolutionInn App