Re: maths

Posted by anon_econ on Dec 29, 2011; 5:14pm
URL: http://discussion-forum.276.s1.nabble.com/maths-tp7135691p7136215.html

U just have to see which function has the lowest value in which region.
To begin with, when x>y, 2x+1>2y+1. Within this region (x>y) see where x+y would be less than 2y+1.
Finally what I got was:
For U>1,
When x>y, x-y<1, U=x+y
When x>y, x-y>1, U=2y=1
When x<y, x-y>-1, U=x+y
When x<y, x-y<-1, U+2x+1.

Plot one of the ICs to see the shape. U get 2 kinks.
The optimum is any point on the b.c b/w (3/2,1/2) & (1/2,3/2). It's clear once you plot it.