This preview shows page 1. Sign up to view the full content.
Unformatted text preview: K , L 2,2 maximize the firms profit? (Hint: (i) Compute r and w under given K , L , A and . (ii) Then compute the profit for each K , L .) 4. [page 12, 3] NQ 1 (a, b, c). 5. The individual maximizes U c , c 1 3 c 2 c 1 subject to c c 1 1. What is the optimal c , c 1 ? (Hint: (i) If the consumption at t 0 is c then the consumption at t 1 is c 1 1 c . (ii) Consuming c at t 0 and c 1 1 c at t 1 gives utility in the amount of 3 c 2 1 c . (iii) The choice of c is between 0 and 1.)...
View Full Document
This note was uploaded on 10/19/2008 for the course ECON 3140 taught by Professor Mbiekop during the Fall '07 term at Cornell University (Engineering School).
- Fall '07