Consider a one period model in which a representative agent maximises the utility function: U(c, l) Inc + 5lnl subject to the budget constraints: c = (1-t)w(1-1) + v
Consider a one period model in which a representative agent maximises the utility function: U(c, l) Inc + 5lnl subject to the budget constraints: c = (1-t)w(1-1) + v
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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- Solve for first order conditions of the representative agent.
- Write down the market clearing condition (resource constraint) for the aggregate economy.
![Consider a one period model in which a representative agent maximises the utility function:
U(c, l) Inc + 5lnl
=
subject to the budget constraints:
c = (1-t)w(1-1) + v
where c is consumption and is the amount of leisure, they enjoy out of a total of one unit of
time available, t is the tax on wage earnings which pays for v in government transfer payments.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fb9800904-37e8-444d-9c36-35c27e100eb1%2Fc87239b9-5b1c-44fa-93e8-66fb33d55bc0%2Fxqdr1x_processed.png&w=3840&q=75)
Transcribed Image Text:Consider a one period model in which a representative agent maximises the utility function:
U(c, l) Inc + 5lnl
=
subject to the budget constraints:
c = (1-t)w(1-1) + v
where c is consumption and is the amount of leisure, they enjoy out of a total of one unit of
time available, t is the tax on wage earnings which pays for v in government transfer payments.
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