Answer to Question #186704 in Economics of Enterprise for Shraddha

Question

Suppose the household's preferences are given the following forms: u(c) = log(c), v(e) = log(e), that ß = 2/3, and that the production functions are given by: F₁(L) L and F₂(K) = K.

(a) (2 points) Derive the equilibrium conditions.

(b) (2 points) Find the equilibrium quantities.

Answer 1

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