(adsbygoogle = window.adsbygoogle || []).push({}); Hi guys, this is my first post, a friend of mine said I should try the site out. Here it goes.

I have a function: Max (c1) = u(c1) + 1/1+p * u(c2)

(c2) is equal to this: (1+r)^2 * A0 + (1+r) (Y1-c1) + Y2

Substituting it into the max gives:

u(c1) + 1/1+p * u [(1+r)^2 * A0 + (1+r) (Y1-c1) + Y2]

FOC, I got: u'(c1) = 1+r/1+p * u'(c2)

However, I think I'm wrong. Can someone please check this for me?

(please show working)

Amy xx

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# Homework Help: How was this equation differentiated?

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