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Unformatted text preview: makes it the logical starting point. The agents current period utility function, u(c t ), is assumed to depend only consumption, c t . The technology that turns capital, k t , into production is described by the production function f (k t ). Here k t measures the existing capital stock chosen during t 1 and productive at the beginning of period t. Because of depreciation during production, only (1 ) will be available during period t. Typically the utility function and the production function are assumed to be continuous, differentiable, strictly increasing and concave in its argument and to satisfy the Inada conditions. A function g (x) satisfies the Inada conditions if lim x0 g(x) x = and lim x g(x) x = 0....
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This note was uploaded on 01/28/2010 for the course ECON 6000 taught by Professor Lauren during the Spring '10 term at University of Guelph.
- Spring '10