- #1
Gary M.
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I have been attempting this problem for the last 2 hours and 45 minutes with no success and am very frustrated since it should be an extremely easy question. Please help!
The question takes place over 3 time periods (0,1,2). Calculating for a discount rate of 10%, what s the optimal distribution for 1200 goods. Price of the goods are $50. Cost is (Xt^2)/20. B=1+10%=1.1
The equation that I am using is:
V0=pX0-c(X0) + B(pX1-cX1) + B^2(pX2-cX2) s.t. x0+x1+x2=1200
this becomes
p-c'(x0)=B(p-c'x1)-B^2(p-c'x2)
50-x0/10=55-1.1(x1)/10 - 60.5 - 1.2(x2)/10
555=x0-1.1(x1)+1.21(x2)
After that, I've tried everything that I can think of. The answers are supposed to be x0=409.4, x1=400.3, x2=390.3
Please help!
Thanks everyone
The question takes place over 3 time periods (0,1,2). Calculating for a discount rate of 10%, what s the optimal distribution for 1200 goods. Price of the goods are $50. Cost is (Xt^2)/20. B=1+10%=1.1
The equation that I am using is:
V0=pX0-c(X0) + B(pX1-cX1) + B^2(pX2-cX2) s.t. x0+x1+x2=1200
this becomes
p-c'(x0)=B(p-c'x1)-B^2(p-c'x2)
50-x0/10=55-1.1(x1)/10 - 60.5 - 1.2(x2)/10
555=x0-1.1(x1)+1.21(x2)
After that, I've tried everything that I can think of. The answers are supposed to be x0=409.4, x1=400.3, x2=390.3
Please help!
Thanks everyone