{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

HW_08 - Economics 11 Winter 2010 HW Assignment#8 Due 3:15PM...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Economics 11, Winter 2010; HW Assignment #8 Due 3:15PM Thursday March 4 1. In class we found the competitive equilibrium in the Robinson Crusoe economy with Cobb-Douglas utilities and with CES utilities with expo- nents 1 / 2. Consider the Robinson Crusoe economy with CES utilities with exponents δ < 1. That is two goods: c, one consumer e = (0 , 1) u ( c, ) = c δ δ + δ δ one firm, production function c = A The constants A , δ are parameters of the economy. (a) Find the competitive equilibrium when δ = - 1 (your answer will involve A ). (b) What happens to equilibrium utility when A increases (that is the technology gets better)? (c) What happens to equilibrium choice of leisure when A increases (that is the technology gets better)? (d) Find the competitive equilibrium as a function of δ (your answer will involve A and δ ). (e) What happens to utility when we fix δ but A increases (that is the technology gets better)? (f) What happens to equilibrium choice of leisure when A increases (that is the technology gets better)?
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}