Heterogeneity in an endowment economy Suppose we have two types of households: A and B. The utility maximization problem for a consumer of type i is                 max     InCi,t+β ln Ci,t+1               Ct,Ct+1 subject to             Ci,t +Ci,t+1/ 1 + rt  = Yi,t +  Yi,t+1 / 1 + rt Note that the A and B households have the same discount rate and the same utility function. The only thing that is possibly different is their endowments.   1, Write down the Euler equation for households A and B.

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Form Utility

The term utility in general refers to the satisfaction earned from usage of a particular product or service. Utility always plays an important role because it influences various important elements like demand & thereby the price of the good or service as well. Though utility is not easy to measure, various types of economic models can be used indirectly. There can be various types of utilities like economic utility, marginal utility, cardinal utility, form utility.