Cobb-Douglasexampleformarketequilibriumandsocialoptimum.doc

# Cobb-Douglasexampleformarketequilibriumandsocialoptimum.doc...

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Cobb-Douglas Example for Market Equilibrium and Social Optimum I. Input \$Ontext Cobb-Douglas Example for 7130 \$Offtext \$Offsymxref Variables x1c, x2c, xj, y1, y2, lam, mu; Equations foc1, foc2, foc3, foc4, foc5, mc1, mc2; foc1 . . 0.5*Sqrt(y1/x1c)-mu =e= 0; foc2 . . 0.5*Sqrt(y2/x2c)-mu =e= 0; foc3 . . 0.5*Sqrt(x1c/y1)-lam =e= 0; foc4 . . 0.5*Sqrt(x2c/y2)-lam =e= 0; foc5 . . -lam*18*xj+4.501*mu =e= 0; mc1 . . 18 =e= y1+y2+4.501*(2*(xj**2)+1);
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Unformatted text preview: mc2 . . x1c +x2c =e= 4.501*xj; Initial Values x1c.l=1.5; x2c.l=1.5; xj.l=0.8; y1.l=5; y2.l=4; lam.l=0.3; mu.l=0.3; model test /foc1.x1c, foc2.x2c, foc3.y1, foc4.y2, foc5.xj, mc1.lam, mc2.mu/; OPTION MCP = path; solve test using mcp; Display x1c.l, x2c.l, y1.l, y2.l, xj.l, lam.l, mu.l; II. Output x1c = 1.769 x2c = 1.413 y1 = 5.003 y2 = 3.995 xj = 0.707 lam = 0.297 mu = 0.841...
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## This note was uploaded on 01/09/2011 for the course ECON 7140 taught by Professor Kutler during the Spring '10 term at Utah Valley University.

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