Math Problem Statement

solve for c(l)

Solution

To solve for c(l)c(l), we need to express the utility function explicitly in terms of consumption cc and leisure ll, given a specific utility level u~\tilde{u}, and then solve for cc.

Restating the Setup:

We are given the utility function:

u(c,l)=c1σ11σ+l1σ11σu(c, l) = \frac{c^{1-\sigma} - 1}{1 - \sigma} + \frac{l^{1-\sigma} - 1}{1 - \sigma}

where c=W(1l)c = W(1 - l) and u~=2(0.51σ1)1σ\tilde{u} = \frac{2(0.5^{1-\sigma} - 1)}{1 - \sigma}. We need to solve the utility equation for c(l)c(l) at a given σ\sigma.

Steps to Solve for c(l)c(l):

  1. Set the utility equation equal to u~\tilde{u}: [ \frac{(W(1 - l))^{1

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Math Problem Analysis

Mathematical Concepts

Utility Function
Optimization
Consumption-Leisure Tradeoff

Formulas

Utility Function: u(c, l) = (c^(1-σ) - 1) / (1 - σ) + (l^(1-σ) - 1) / (1 - σ)
Consumption: c = W(1 - l)
Utility Level: ũ = 2(0.5^(1-σ) - 1) / (1 - σ)

Theorems

Utility Maximization
First-Order Conditions

Suitable Grade Level

Undergraduate Economics