Please explain how to get the answer a) A planner in a small, open economy has a utility functionU = x1X2and production takes place according to the production functionsY1 =10L, – 0.5L?Y2 = 10L2 – LThe world prices of the goods are p1 = 10 and p2 = 5. The total amount of labouravailable in the economy is 5 units.(i)Formulate the Lagrange equation.(ii)Write down the Karush-Khun-Tucker conditions.(iii)Determine a possible solution.

In economics, a production function is a means of examining the relationship between input and…

a) A planner in a small, open economy has a utility function U = x1x₂ and production takes place according to the production functions y₁ = 10L₁ - 0.5L²2 Y2= 10L₂ - L2 10 and P2 The world prices of the goods are p₁ = available in the economy is 5 units. (i) (ii) = 5. The total amount of labour Formulate the Lagrange equation. Write down the Karush-Khun-Tucker conditions.

a) A planner in a small, open economy has a utility function U = x1x₂ and production takes place according to the production functions y₁ = 10L₁ - 0.5L²2 Y2= 10L₂ - L2 10 and P2 The world prices of the goods are p₁ = available in the economy is 5 units. (i) (ii) = 5. The total amount of labour Formulate the Lagrange equation. Write down the Karush-Khun-Tucker conditions.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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