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Consider the utility maximization problem of each young person: 1 0-1 1 0-10-1 max Cit, C2t.kt+1 a C1 + azc2t subject to Cit + kt+1 = wt C2t = (1+ re+1)k++1 Cit 2 0, C2t 2 0, kt+1 > 0 Derive the optimal value of ct. For this question, suppose that a1 = 1, az = 1, We = 2.1, re+1 = 0.21, and 0 = 1.5. Your answer must be presented as the numerical value (e.g., Cit = 1.5).

Consider the utility maximization problem of each young person: 1 0-1 1 0-10-1 max Cit, C2t.kt+1 a C1 + azc2t subject to Cit + kt+1 = wt C2t = (1+ re+1)k++1 Cit 2 0, C2t 2 0, kt+1 > 0 Derive the optimal value of ct. For this question, suppose that a1 = 1, az = 1, We = 2.1, re+1 = 0.21, and 0 = 1.5. Your answer must be presented as the numerical value (e.g., Cit = 1.5).

Linear Algebra: A Modern Introduction
Linear Algebra: A Modern Introduction
4th Edition
ISBN:9781285463247
Author:David Poole
Publisher:David Poole
Chapter2: Systems Of Linear Equations
Section2.4: Applications
Problem 27EQ
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Consider the utility maximization problem of each young person: 1 Ө-1 1 0-10-1 + a, C2t max Cit, C2t.kt+1 subject to Cit + kt+1 = Wt C2t = (1+ rt+1)kt+1 Cit 2 0, c2t 2 0, kį+1 2 0 Derive the optimal value of c1t. For this question, suppose that a1 = 1, az = 1, W; = 2.1, r+1 = 0.21, and 0 = 1.5. Your answer must be presented as the numerical value (e.g., Cit = 1.5). Derive the optimal value of c2t. For this question, suppose that a, = 2, a2 = v6, W; = 1, rt+1 = 0.5, and 0 = 0.5. Your answer must be presented as the numerical value (e.g., C2t = 2).
Transcribed Image Text:Consider the utility maximization problem of each young person: 1 Ө-1 1 0-10-1 + a, C2t max Cit, C2t.kt+1 subject to Cit + kt+1 = Wt C2t = (1+ rt+1)kt+1 Cit 2 0, c2t 2 0, kį+1 2 0 Derive the optimal value of c1t. For this question, suppose that a1 = 1, az = 1, W; = 2.1, r+1 = 0.21, and 0 = 1.5. Your answer must be presented as the numerical value (e.g., Cit = 1.5). Derive the optimal value of c2t. For this question, suppose that a, = 2, a2 = v6, W; = 1, rt+1 = 0.5, and 0 = 0.5. Your answer must be presented as the numerical value (e.g., C2t = 2).
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