- 2 Assume That The Demands In The Society With Two Sectors Are Deter Mined By The Utility Function Clt C22 Where 0 1 (107.2 KiB) Viewed 61 times
> 2. Assume that the demands in the society with two sectors are deter- mined by the utility function Clt + C22, where 0
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> 2. Assume that the demands in the society with two sectors are deter- mined by the utility function Clt + C22, where 0
> 2. Assume that the demands in the society with two sectors are deter- mined by the utility function Clt + C22, where 0) < 11, 12 < 1. Assume that the production side is the same as in the model of Baumol disease in the lecture notes. (a) Is this economy is caught by the Baumol disease? (b) Assume that the second good is a social necessity so that there is a constraint C2+ > C2. Is this economy caught by Baumol's disease? (c) Assme that the consumption of the social necessity is required to be proportional to output of good 1. Is this economy caught by Baumol's disease?