ajaz_204_2013_2014_HW_2

# Case b suppose 6 university of toronto department of

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

This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: what is the change in separately. due to a small change in Hint: You will have to consider each “case” Case A: When We know that which means that we can calculate change in applying the envelope theorem on: [ due to a small change in a parameter by ) ) ) Case B: Suppose [ ) (d) Derive an equation for ( ) ( ) ( ) in terms of the parameters. What does this equation tell us about the parameter Case A: When By the envelope theorem, we know this is: 7 University of Toronto, Department of Economics, ECO 204, 2013 - 20143 It tells us that as . For what value of is maximized? When: That is, with when unconstrained solution (i.e. convince yourself of what’s going on here. from ). You should draw and Case B: Suppose By the envelope theorem, we know this is: It tells us that stays constant as . 8...
View Full Document

## This homework help was uploaded on 02/15/2014 for the course E 204 taught by Professor Ajaz during the Winter '13 term at University of Toronto.

Ask a homework question - tutors are online