EBK PRINCIPLES OF MACROECONOMICS
7th Edition
ISBN: 9781337342155
Author: Mankiw
Publisher: CENGAGE LEARNING - CONSIGNMENT
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Chapter 6, Problem 3QCMC
To determine
The impact of tax on consumers and sellers.
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Problem 2. If the consumer preference can be represented by a CES function with δ = 0.5, i.e. u(x, y) = x0.5 + y0.5. Let the prices and income be (px, py, w).
1. Set up the Lagrangian expression.2. Take the first-order conditions.3. Substitute into budget constraint to derive the optimal consumption bundles.
Chapter 6 Solutions
EBK PRINCIPLES OF MACROECONOMICS
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