Solve the consumer optimization problem and discuss the implications from the first order conditions
ASSIGNMENT
- a) The consumer faces the problem of maximizing the utility function given by the following equation and subject to the constraint given.
Subject to the constraint that
Where r is the interest rate, c is consumption y is the level of income and that consumption over time is discounted at a rate of sigma.
ü Solve the consumer optimization problem and discuss the implications from the first order conditions
