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Consider the following two economies: t = 1; 2. u(c) = log(c). = 1. delta = 1. F(K) = KO:5. K1 = 1 t = 1; 2. u(c) = log(c). = 1. delta = 1. F(K) = KO:5. K1 = 4 Setup the social planner problem for both economies, and show the equations that characterize its solution. Calculate the total utility enjoyed by consumers in both economies. Does having 4 times more initial capital make you four times happier? Why?

Consider the following two economies: t = 1; 2. u(c) = log(c). = 1. delta = 1. F(K) = KO:5. K1 = 1 t = 1; 2. u(c) = log(c). = 1. delta = 1. F(K) = KO:5. K1 = 4 Setup the social planner problem for both economies, and show the equations that characterize its solution. Calculate the total utility enjoyed by consumers in both economies. Does having 4 times more initial capital make you four times happier? Why?

Microeconomics: Private and Public Choice (MindTap Course List)
Microeconomics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506893
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Chapter2: Some Tools Of The Economist
Section: Chapter Questions
Problem 14CQ
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Consider the following two economies: t = 1; 2. u(c) = log(c). = 1. delta = 1. F(K) = KO:5. K1 = 1 t = 1; 2. u(c) = log(c). = 1. delta = 1. F(K) = KO:5. K1 = 4 %3D %3D Setup the social planner problem for both economies, and show the equations that characterize its solution. Calculate the total utility enjoyed by consumers in both economies. Does having 4 times more initial capital make you four times happier? Why?
Transcribed Image Text:Consider the following two economies: t = 1; 2. u(c) = log(c). = 1. delta = 1. F(K) = KO:5. K1 = 1 t = 1; 2. u(c) = log(c). = 1. delta = 1. F(K) = KO:5. K1 = 4 %3D %3D Setup the social planner problem for both economies, and show the equations that characterize its solution. Calculate the total utility enjoyed by consumers in both economies. Does having 4 times more initial capital make you four times happier? Why?
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