Business, 24.02.2020 17:22 marley5818

4. Sebastian has the following utility function over consumption today (c1) and consumption tomorrow (c2): U(c1, c2) = ln(c1) + bln(c2) where 0 < b < 1 and ln denotes the natural logarithm Let p1 denote the price of c1 and p2 denote the price of c2. Assume that Sebastian’s income is Y. Derive Sebastian’s Marshallian demand functions for consumption today (c1) and consumption tomorrow (c2). What happens to c1 and c2 as b approaches 0?

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4. Sebastian has the following utility function over consumption today (c1) and consumption tomorrow...

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