Answer to Question #240232 in Microeconomics for Vaibhav

Question #240232

Consider an infinitely lived agent who has one unit of a commodity and she consumes it over lifetime. The commodity is not perishable and she receives no dividend or interest on saving. Consumption of the commodity in period t is denoted Xt. Let the lifetime utility function be given by: u(x0, x1,...,) = Σ B^t (ln Xt).[Limit 1 to infinity]. Here, 0 < B < 1.

Compute the consumer’s optimal consumption level for each period.


1
Expert's answer
2021-09-22T07:27:45-0400

Consumption Xt

U=ΣBt(lnXt).U=Σ B^t (ln Xt).

Optimal consumption

U=XBU=XB


Need a fast expert's response?

Submit order

and get a quick answer at the best price

for any assignment or question with DETAILED EXPLANATIONS!

Comments

No comments. Be the first!

Leave a comment