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By substitution, and x1 and x2 that solve the following system of
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1. By substitution, and x1 and x2 that solve the following system of equations: 4x1 ? 6x2 = ?2 8x1 + 2x2 = 24
2. Solve the following constrained maximization problem:

max U = ln(ct) + ln(ct+1) ct ; ct+1

ct+1 yt+1 subject to ct + 1 + r = yt + 1 + r

Explain what the values of c? and c? mean. t t+1

3. Let the F(K,N) = K?N1?? with ? ? (0,1):
(a) Take the first, second, and cross derivative of F (K, N ). Explain what the sign of each one means.

(b) Divide the function by N and show that the function can be written as F(K,N) = (K )?. N

(c) Letting k = K , express F(K,N) as a function of just k and let that be f(k). N

(d) Take the first and second derivative of f(k). Explain what the sign of each one means. (e) Based on those derivatives, sketch a graphical representation of the function.

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This question was answered on: Feb 21, 2020

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