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Bookmark or Share- consumer theory - FOC greater than 0 - Economics Stack ExchangeIt's not quite possible to have "FOC greater than 0", since the FOC is a condition, not a number. What is really meant here is the derivative of the utility function. If your utility function is given by u(x) u (x), then the FOC for a maximum would be u′(x) = 0 u ′ (x) = 0. Now if you calculate the derivative u′(x) u ′ (x) and then ...
- What are FOCs and SOCs? - Economics Stack Exchange6. For example when you are talking about profit maximization starting from a profit function π q, the main condition for a maximum is that: = 0. This is the FOC (first order condition). Though, to be sure that what you have found above is a true maximum you should also check a 'secondary' condition which is: ∂2 q2 ∂ 2 q 2
- optimization - Contradictory FOC and maximizing solution - Economics ...FOC are \textit {necessary} for an inner optimum (can be a max or min or saddle) and SOC (often) allow to characterize the type of optimum. At the boundaries (when x go to 0 or 1) there can be a max (or a sup), a min (or an inf) with no FOC being satisfied. As alluded to by Bertrand in his +1 comments this is because FOCs tell you where maximum ...
- Deriving the Euler Equation - Economics Stack ExchangeNow to get the Euler equation: If you take the derivative of that with respect to K_t+1 you will get your FOC there. (This is the FOC for the whole Lagrangian, because the derivative of U(C) with respect to K is 0 here, as any dependence of C on K is already in the constraint.) Your Euler equation involves 3 unknown variables: Ct, Ct+1 and Kt+1.
- macroeconomics - Maximization problem FOC and Euler equation ...1 Answer. Sorted by: Taking a variable as given comes from the assumptions of the model and cannot result from any optimisation problem (think simply that when a variable is taken as given it is treated as a constant in your problem so one cannot lead to the other). Here, taking the public good as given means the household is not able to choose ...
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