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Consider an agent who want to maximize her utility function, 1 1 22 U (C₁, C₂) = C₁ C₂ subject to the budget constraint,
Posted: Sun Jul 03, 2022 6:56 am
by answerhappygod
- Consider An Agent Who Want To Maximize Her Utility Function 1 1 22 U C C C C Subject To The Budget Constraint 1 (53.08 KiB) Viewed 13 times
Consider an agent who want to maximize her utility function, 1 1 22 U (C₁, C₂) = C₁ C₂ subject to the budget constraint, C2 C₁ + = 1 2 with C₁, C₂ > 0 indicating consumption of commodity 1 and 2, respectively. Fill the empty spaces with the correct answer. • The critical point is (c₁, c₂ ) = (₂). • The shadow price is λ = • The determinant of the bordered Hessian is * D(C₁, C₂, ₁) = and therefore, the critical point is a local maximum.