PS1 - ECON 3102 - 002 Fall 2010 Problem Set 1 This problem...

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ECON 3102 - 002 Fall 2010 Problem Set 1 This problem set is due Friday, October 15 at the beginning of the class. The maximum score is 25 points. questions about the problem set 1. Q1. Consider the consumer optimization problem we have studied in class. Suppose that the utility function is given by U ( C;l ) = min ( C;al ) where a is a positive constant. Determine the optimal consumption bundle ( C ;l ) in terms of a , w , h , and T . Hint: Optimal consumption bundle will be on the line C = al . Q2. Consider again the problem of the representative consumer whose preferences given by the utility function U ( C;l ) = C l ± where ± and ² are positive constants. Determine the optimal consumption bundle ( C ;l ) in terms of ± , ² , , h , T and w , i.e. obtain the closed-form solutions for C and l . Q3. a. Consider a representative consumer whose preferences over consumption and leisure are given by the utility function
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This note was uploaded on 12/10/2010 for the course ECON 3101 taught by Professor Staff during the Spring '08 term at Minnesota.

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PS1 - ECON 3102 - 002 Fall 2010 Problem Set 1 This problem...

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