{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

# 380 Quiz 1 Answers - -= ∂ 2 What is an indirect or value...

This preview shows page 1. Sign up to view the full content.

Quiz 1 Economics 380 Name____________________ 1. Economists formalize problems as maximizing or minimizing? For a general objective function 1 2 ( , , ) y f x x z = where 1 x and 2 x are choice variables (endogenous variables) and z is an exogenous variable, what are the first order conditions (calculus) for maximization of y . 1 2 1 1 2 2 ( , , ) 0 ( , , ) 0 f x x z x f x x z x = = Example: 2 2 1 1 2 2 1 2 1 1 1 2 2 2 100 .1 200 1 ( , , ) 100 .2 0 ( , , ) 200 2 0 y zx x x x f x x z z x x f x x z x x = - + - = - = = - = 2. What is an indirect or value function? (you can use the notation in 1. to explain if you wish)
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: -= ∂ 2. What is an indirect or value function? (you can use the notation in 1. to explain if you wish) If x 1 * and x 2 * satisfy the first order conditions, the indirect or value function is * * 1 2 ( , , ). f x x z Example. In the example * 1 500 , x z = and * 2 100. x = The indirect or value function is 2 2 100 (500 ) .1(500 ) 200(100) 1(100) y z z z =-+-...
View Full Document

{[ snackBarMessage ]}

### What students are saying

• As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

Kiran Temple University Fox School of Business ‘17, Course Hero Intern

• I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

Dana University of Pennsylvania ‘17, Course Hero Intern

• The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

Jill Tulane University ‘16, Course Hero Intern