Consider the following consumption problem commonly referred to as the "cake- eating" problem. The consumer starts with a certain amount of capital, ko (e.g. a certain size for the cake), and "eats" it over time. The consumer's problem is to maximize: 3* log(ct) max subject to the constraints: kt+1 2 k - c4 ko > 0 given a) Write down Bellman's equation for this problem.

Consider the following consumption problem commonly referred to as the "cake- eating" problem. The consumer starts with a certain amount of capital, ko (e.g. a certain size for the cake), and "eats" it over time. The consumer's problem is to maximize: 3* log(ct) max subject to the constraints: kt+1 2 k - c4 ko > 0 given a) Write down Bellman's equation for this problem.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter4: Utility Maximization And Choice

Section: Chapter Questions

Problem 4.3P

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