h2w08 - Department of Economics The Ohio State University...

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Department of Economics The Ohio State University Econ 805—Homework #2 due Thursday, January 31 Prof James Peck Winter 2008 1. Consider the following economy with one consumer, 2 f rms, and 3 goods. The three goods are two consumption goods, x and y , and leisure, c . The consumer receives no utility or disutility from leisure, as long as we have c 0 . The utility function is u ( x, y, c )=log( x )+log( y ) . The consumer is endowed with 1 unit of leisure and none of goods x and y : ω =(0 , 0 , 1) .F i rm f , producing good x , has production function x f = μ L f 8 1 / 2 where L f is the labor input used by f rm f in producing good x .F i r m g , producing good y , has production function x g = μ L g 8 1 / 2 where L g is the labor input used by f rm g in producing good y . The consumer owns both f rms. Note: This notation is di
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This note was uploaded on 07/17/2008 for the course ECON 805 taught by Professor Peck during the Spring '08 term at Ohio State.

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h2w08 - Department of Economics The Ohio State University...

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