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Results tagged with utility
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user 2797
Utility, or usefulness, is the (perceived) ability of something to satisfy needs or wants.
1
vote
intertemporal utility function usage : calculating consumption
I finally figured out how to use the utility function so I will detail so anyone who needs a detailed answer as it was quite unclear even though I was well aware of the equation :
C1 + C2/(1+r) = Y1 … not know how to use it so I will explain ,
Y1 = 1000
Y2 = 5000
r = 0%
So we have
C1+C2/(1+0)=Y1+Y2/(1+0
C1+C2=Y1+Y2
So C1=Y1+Y2-C2 with Y1+Y2=6000
Replace the value of C1 in the utility …
- 349
5
votes
3
answers
3k
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intertemporal utility function usage : calculating consumption
exemple :
A consumer who will only live 2 periods receives 1000€ in the first period and 5000€ in the second period, if the interest is at 0% how much will he consume in both periods knowing that his utility … How do I make use of this utility function to calculate the consumption in both periods ? …
- 349