(************** Content-type: application/mathematica ************** CreatedBy='Mathematica 5.0' Mathematica-Compatible Notebook This notebook can be used with any Mathematica-compatible application, such as Mathematica, MathReader or Publicon. The data for the notebook starts with the line containing stars above. To get the notebook into a Mathematica-compatible application, do one of the following: * Save the data starting with the line of stars above into a file with a name ending in .nb, then open the file inside the application; * Copy the data starting with the line of stars above to the clipboard, then use the Paste menu command inside the application. Data for notebooks contains only printable 7-bit ASCII and can be sent directly in email or through ftp in text mode. Newlines can be CR, LF or CRLF (Unix, Macintosh or MS-DOS style). NOTE: If you modify the data for this notebook not in a Mathematica- compatible application, you must delete the line below containing the word CacheID, otherwise Mathematica-compatible applications may try to use invalid cache data. For more information on notebooks and Mathematica-compatible applications, contact Wolfram Research: web: http://www.wolfram.com email: info@wolfram.com phone: +1-217-398-0700 (U.S.) Notebook reader applications are available free of charge from Wolfram Research. *******************************************************************) (*CacheID: 232*) (*NotebookFileLineBreakTest NotebookFileLineBreakTest*) (*NotebookOptionsPosition[ 367665, 12572]*) (*NotebookOutlinePosition[ 442148, 15076]*) (* CellTagsIndexPosition[ 442104, 15072]*) (*WindowFrame->Normal*) Notebook[{ Cell[BoxData[{ StyleBox[\(Mathematica\ Tutorial\ for\ APEC\ 720\), "Subtitle"], "\[IndentingNewLine]", StyleBox[\(Klaus\ Moeltner\ /\ Spring\ 2004\), "SmallText"]}], "Input"], Cell[CellGroupData[{ Cell[BoxData[ StyleBox[\(Formatting\ text\), "Subsubtitle"]], "Input"], Cell[TextData[{ StyleBox["Format titles and text:", FontVariations->{"Underline"->True}], "\nTo quickly change the font size of text in your notebook, choose \n>", StyleBox["Format /Style /", FontSlant->"Italic"], "and select a style type. \nAlternatively, select ", StyleBox[">Format /ShowToolbar", FontSlant->"Italic"], ", and choose from the toolbar menu of text styles.\n\nAlso, for input \ that's just plain text or comments (like this one), it's best to select \ \"text\" from the Format / Style - menu. For actual input to be evaluated, \ select \"input\"." }], "Text"], Cell[TextData[{ StyleBox["To start a new cell", FontVariations->{"Underline"->True}], " WITHOUT \"evaluating\" any input, just place your browser beneath the \ current cell,and click (the browser should change to a horizontal line with a \ reversed arrow on each end).\nTo evaluate input, press \"Shift+Enter\"." }], "Text", PageWidth->WindowWidth] }, Closed]], Cell[CellGroupData[{ Cell[BoxData[ StyleBox[\(Grouping\ Cells\), "Subsubtitle"]], "Input"], Cell[TextData[{ StyleBox["To group cells: ", FontVariations->{"Underline"->True}], "\nStart with ", StyleBox[">Cell /Cell Grouping / Manual Grouping.", FontSlant->"Italic"], " This will give you full control over cell grouping.\nSelect adjacent \ cells you want to group by clicking on the cell outline (vertical bar to the \ very right in your window) while holding the \"Shift\" key.\n\nA longer cell \ outline will appear to the right of the original ones. To \"compress\" the \ grouped cells, just double-click on the long outline. To \"expand\", just \ double-click on the \"arrow\" head of the compressed outline. All of the \ following topics are grouped." }], "Text"] }, Closed]], Cell[CellGroupData[{ Cell[BoxData[ StyleBox[\(Creating\ Palettes\ and\ Symbolizing\ subscripts\), "Subsubtitle"]], "Input"], Cell[BoxData[ RowBox[{\(General::"spell1"\), \(\(:\)\(\ \)\), "\<\"Possible spelling \ error: new symbol name \\\"\\!\\(and\\)\\\" is similar to existing symbol \ \\\"\\!\\(And\\)\\\". \\!\\(\\*ButtonBox[\\\"More\[Ellipsis]\\\", \ ButtonStyle->\\\"RefGuideLinkText\\\", ButtonFrame->None, \ ButtonData:>\\\"General::spell1\\\"]\\)\"\>"}]], "Message"], Cell[BoxData[ \(and\ Creating\ Palettes\ subscripts\ Symbolizing\)], "Output"], Cell[TextData[{ StyleBox["Creating customized Palettes:\n", FontVariations->{"Underline"->True}], "Build-in palettes can be made visible by selecting >File / Palettes /. A \ good one to have open at all times is \"BasicInput\".", StyleBox["\n", FontVariations->{"Underline"->True}], "It's convenient to create your own palettes with characters and symbols \ you expect to use frequently, especially those with superscripts or \ subscripts that are tedious to input manually. Palette buttons can also be \ programmed to execute commands, much like a \"macro\" button in MS Office \ packages.\n\nTo start, select >Input / Create Table,Matrix,Palette and select \ \"Palette\", and choose the number of rows and columns (you can always add \ more buttons later).\nWe'll create a palette customized to a \ Utility-maximization problem with 2 agents and goods and a Cobb-Douglas \ U-function in a pure-exchange economy." }], "Text"], Cell[CellGroupData[{ Cell[BoxData[GridBox[{ { ButtonBox[\(p\_1\)], ButtonBox[\(p\_2\)]}, { ButtonBox[\(x\_11\)], ButtonBox[\(x\_21\)]}, { ButtonBox[\(x\_12\)], ButtonBox[\(x\_22\)]}, { ButtonBox[\(\[Omega]\_11\)], ButtonBox[\(\[Omega]\_21\)]}, { ButtonBox[\(\[Omega]\_12\)], ButtonBox[\(\[Omega]\_22\)]}, { ButtonBox[\(U\_1\)], ButtonBox[\(U\_2\)]}, { ButtonBox[\(\[Lambda]\_1\)], ButtonBox[\(\[Lambda]\_2\)]}, { ButtonBox["\[Alpha]"], ButtonBox[\(1 - \[Alpha]\)]}, { ButtonBox["\[Beta]"], ButtonBox[\(1 - \[Beta]\)]}, { ButtonBox[\(\(\[Omega]\_1\)\&_\)], ButtonBox[\(\(\[Omega]\_2\)\&_\)]}, { ButtonBox[\(\[ScriptCapitalL]\_1\)], ButtonBox[\(\[ScriptCapitalL]\_2\)]}, { ButtonBox[\(\[Alpha]\_1\)], ButtonBox[\(\[Alpha]\_2\)]}, { ButtonBox[\(\[Beta]\_1\)], ButtonBox[\(\[Beta]\_2\)]} }, RowSpacings->0, ColumnSpacings->0, GridFrame->True, RowLines->True, ColumnLines->True, GridDefaultElement:>ButtonBox[ "\\[Placeholder]"]]], "Input"], Cell[BoxData[ RowBox[{"{", RowBox[{ RowBox[{"{", RowBox[{ ButtonBox[\(p\_1\)], ",", ButtonBox[\(p\_2\)]}], "}"}], ",", RowBox[{"{", RowBox[{ ButtonBox[\(x\_11\)], ",", ButtonBox[\(x\_21\)]}], "}"}], ",", RowBox[{"{", RowBox[{ ButtonBox[\(x\_12\)], ",", ButtonBox[\(x\_22\)]}], "}"}], ",", RowBox[{"{", RowBox[{ ButtonBox[\(\[Omega]\_11\)], ",", ButtonBox[\(\[Omega]\_21\)]}], "}"}], ",", RowBox[{"{", RowBox[{ ButtonBox[\(\[Omega]\_12\)], ",", ButtonBox[\(\[Omega]\_22\)]}], "}"}], ",", RowBox[{"{", RowBox[{ ButtonBox[\(U\_1\)], ",", ButtonBox[\(U\_2\)]}], "}"}], ",", RowBox[{"{", RowBox[{ ButtonBox[\(\[Lambda]\_1\)], ",", ButtonBox[\(\[Lambda]\_2\)]}], "}"}], ",", RowBox[{"{", RowBox[{ ButtonBox["\[Alpha]"], ",", ButtonBox[\(1 - \[Alpha]\)]}], "}"}], ",", RowBox[{"{", RowBox[{ ButtonBox["\[Beta]"], ",", ButtonBox[\(1 - \[Beta]\)]}], "}"}], ",", RowBox[{"{", RowBox[{ ButtonBox[\(\(\[Omega]\_1\)\&_\)], ",", ButtonBox[\(\(\[Omega]\_2\)\&_\)]}], "}"}], ",", RowBox[{"{", RowBox[{ ButtonBox[\(\[ScriptCapitalL]\_1\)], ",", ButtonBox[\(\[ScriptCapitalL]\_2\)]}], "}"}], ",", RowBox[{"{", RowBox[{ ButtonBox[\(\[Alpha]\_1\)], ",", ButtonBox[\(\[Alpha]\_2\)]}], "}"}], ",", RowBox[{"{", RowBox[{ ButtonBox[\(\[Beta]\_1\)], ",", ButtonBox[\(\[Beta]\_2\)]}], "}"}]}], "}"}]], "Output"] }, Open ]], Cell[TextData[{ "Note: ", StyleBox["Crtl+Enter ", FontSlant->"Italic"], "adds a row, ", StyleBox["Cntrl+,", FontSlant->"Italic"], " (comma) adds a column (at any point in the palette you choose - just put \ your browser there).\nAfter defining each button, your palette is \"active\". \ To show your palette in a separate window, select your palette, then :", StyleBox[">File/Generate Palette from selection", FontSlant->"Italic"], ". To save your palette, just close the palette window (by clicking on the \ \"x\" in the upper right hand corner), and follow the prompts. The palette \ will be saved with a \"notebook\" .nb extension, just like a regular \ notebook. To add stuff or edit your palette, open it and save it as an \ actual notebook using >File / Generate notebook from palette." }], "Text"], Cell[TextData[{ StyleBox["Symbolizing subscripts:", FontVariations->{"Underline"->True}], "\nSubscripted code is typical in economics, and generally much neater than \ just adding numbers to a variable (as in \"x11\"). However, for a variety of \ reasons, some ", StyleBox["Mathematica", FontSlant->"Italic"], " commands don't recognize subscripted elements as \"symbols\", i.e \ function inputs etc. A way around this is to symbolize all subscripted \ elements you'd like to use as follows:" }], "Text"], Cell[BoxData[ \(<< Utilities`Notation`\)], "Input"], Cell["\<\ Note the \"Notation Palette\" that just opened, probably in the upper right \ hand corner. Use the \"Symbolize[]\" for each subscripted element.\ \>", "Text"], Cell[CellGroupData[{ Cell[BoxData[ RowBox[{ RowBox[{"Symbolize", "[", TagBox[\(p\_1\), NotationBoxTag, TagStyle->"NotationTemplateStyle"], "]"}], ";"}]], "Input"], Cell[BoxData[ RowBox[{ RowBox[{"Symbolize", "[", TagBox[\(p\_2\), NotationBoxTag, TagStyle->"NotationTemplateStyle"], "]"}], ";"}]], "Input"], Cell[BoxData[ RowBox[{ RowBox[{"Symbolize", "[", TagBox[\(x\_11\), NotationBoxTag, TagStyle->"NotationTemplateStyle"], "]"}], ";"}]], "Input"], Cell[BoxData[ RowBox[{ RowBox[{"Symbolize", "[", TagBox[\(x\_21\), NotationBoxTag, TagStyle->"NotationTemplateStyle"], "]"}], ";"}]], "Input"], Cell[BoxData[ RowBox[{ RowBox[{"Symbolize", "[", TagBox[\(x\_22\), NotationBoxTag, TagStyle->"NotationTemplateStyle"], "]"}], ";"}]], "Input"], Cell[CellGroupData[{ Cell[BoxData[ RowBox[{ RowBox[{"Symbolize", "[", TagBox[\(x\_12\), NotationBoxTag, TagStyle->"NotationTemplateStyle"], "]"}], ";"}]], "Input"], Cell[BoxData[ RowBox[{\(General::"spell1"\), \(\(:\)\(\ \)\), "\<\"Possible spelling \ error: new symbol name \ \\\"\\!\\(x\[UnderBracket]Subscript\[UnderBracket]12\\)\\\" is similar to \ existing symbol \\\"\\!\\(x\\_21\\)\\\". \\!\\(\\*ButtonBox[\\\"More\ \[Ellipsis]\\\", ButtonStyle->\\\"RefGuideLinkText\\\", ButtonFrame->None, \ ButtonData:>\\\"General::spell1\\\"]\\)\"\>"}]], "Message"] }, Open ]], Cell[BoxData[ RowBox[{ RowBox[{"Symbolize", "[", TagBox[\(\[Omega]\_11\), NotationBoxTag, TagStyle->"NotationTemplateStyle"], "]"}], ";"}]], "Input"], Cell[BoxData[ RowBox[{ RowBox[{"Symbolize", "[", TagBox[\(\[Omega]\_21\), NotationBoxTag, TagStyle->"NotationTemplateStyle"], "]"}], ";"}]], "Input"], Cell[BoxData[ RowBox[{ RowBox[{"Symbolize", "[", TagBox[\(\[Omega]\_22\), NotationBoxTag, TagStyle->"NotationTemplateStyle"], "]"}], ";"}]], "Input"], Cell[BoxData[ RowBox[{ RowBox[{"Symbolize", "[", TagBox[\(\[Lambda]\_1\), NotationBoxTag, TagStyle->"NotationTemplateStyle"], "]"}], ";"}]], "Input"], Cell[BoxData[ RowBox[{ RowBox[{"Symbolize", "[", TagBox[\(\[Lambda]\_2\), NotationBoxTag, TagStyle->"NotationTemplateStyle"], "]"}], ";"}]], "Input"] }, Open ]], Cell["\<\ To use symbolized elements in definitions of \"pure\" functions, you need to \ add a \":\" after each subscripted term as shown:\ \>", "Text", Background->RGBColor[0.972549, 0.992157, 0.733333]], Cell[CellGroupData[{ Cell[BoxData[ \(g[\(x\_11\) : _, \(x\_21\) : _] = x\_11\^2 + x\_21\^2\)], "Input"], Cell[BoxData[ \(x\_11\%2 + x\_21\%2\)], "Output"] }, Open ]], Cell[CellGroupData[{ Cell[BoxData[ \(g[a, b]\)], "Input"], Cell[BoxData[ \(a\^2 + b\^2\)], "Output"] }, Open ]], Cell[CellGroupData[{ Cell[BoxData[ \(g[2, 4]\)], "Input"], Cell[BoxData[ \(20\)], "Output"] }, Open ]] }, Open ]], Cell[CellGroupData[{ Cell[BoxData[ StyleBox[\(Saving\ Notebooks\ and\ notebook\ elements\), "Subsubtitle"]], "Input"], Cell[TextData[{ StyleBox["Saving notebooks and free-standing palettes:", FontVariations->{"Underline"->True}], "\nEasy -just select >File / Save or Save As, and select a file name and \ destination folder just like with any other software. Note that the library \ server reverse-maps your computer as v:\\ drive. " }], "Text"], Cell[TextData[{ StyleBox["Saving other elements:", FontVariations->{"Underline"->True}], "\nOften times, you may want to save programs, commands, or functions you \ create to quickly re-load it later for other projects. For example, let's \ create a gradient function that takes first derivatives of any possible input \ function with respect to any possible number of variables (as shown in \ Stinespring, p. 54):" }], "Text"], Cell[BoxData[ \(G[s_, vars_List] := Map[Function[{v}, D[s, v]], vars]\)], "Input"], Cell[TextData[{ "The generic command to save programs is ", StyleBox[">Save[\"filename\",elements to be saved]", "Input"], ". However, this would save your stuff to a pre-mapped destination drive \ (D:\\, according to Greg) on the library server. You may not find it again, \ and other users could easily alter, replace, or delete it. Thus, it is a good \ idea to create a folder on your computer or CD-rom for all such saved \ elements. Example:" }], "Text"], Cell[BoxData[ \(Save["\", G]\)], "Input"], Cell[TextData[{ "This saves G under the filename \"G\" to the folder \"code\" following the \ specified directory (in this case the c:\\ drive on my computer). Note: Don't \ label any folder \"functions\" - For some reason ", StyleBox["Mathematica", FontSlant->"Italic"], " has problems with that. To load G later on, type:" }], "Text"], Cell[BoxData[ \(<< V:\\Klaus\\APEC720\\Mtica\\code\\G\)], "Input"], Cell[TextData[{ "You can also save multiple elements under the same filename: ", StyleBox["(general note: \";\" at the end of a command line suppresses \ output)", FontWeight->"Bold"] }], "Text"], Cell[BoxData[ \(\({a = 3, b = 1};\)\)], "Input"], Cell[BoxData[ \(Save["\", a, b]\)], "Input"], Cell[BoxData[ \(Clear[a, b]\)], "Input"], Cell[BoxData[ \(\(<< V:\\Klaus\\APEC720\\Mtica\\code\\parkinglot;\)\)], "Input"], Cell["To see what's in a specific file, type:", "Text"], Cell[CellGroupData[{ Cell[BoxData[ \(\(!! V:\\Klaus\\APEC720\\Mtica\\code\\parkinglot\)\)], "Input"], Cell["\<\ a = 3 b = 1\ \>", "Print"] }, Open ]], Cell[BoxData[ \(Clear[a, b]\)], "Input"], Cell["To delete a file, type:", "Text"], Cell[BoxData[ \(\(DeleteFile["\"];\)\)], \ "Input"] }, Closed]], Cell[CellGroupData[{ Cell[BoxData[ StyleBox[\(Clearing\ and\ Removing\ elements\), "Subsubtitle"]], "Input"], Cell[TextData[{ StyleBox["Clearing elements:\n", FontVariations->{"Underline"->True}], "There are 2 ways to dis-associate (\"clear\") an element from a previously \ assigned value. The first is using \"Clear[], the second is simply assigning \ \".\" to the element. Example:" }], "Text"], Cell[CellGroupData[{ Cell[BoxData[ \(x = 3\)], "Input"], Cell[BoxData[ \(3\)], "Output"] }, Open ]], Cell[CellGroupData[{ Cell[BoxData[ \(x\)], "Input"], Cell[BoxData[ \(3\)], "Output"] }, Open ]], Cell[BoxData[ \(Clear[x]\)], "Input"], Cell[CellGroupData[{ Cell[BoxData[ \(x\)], "Input"], Cell[BoxData[ \(x\)], "Output"] }, Open ]], Cell["\<\ Note that only the second route works for elements with subscripts. To use \ \"Clear[]\" with subscripts, you have to symbolize those lements first (see \ above), otherwise you'll get an eror message.\ \>", "Text"], Cell[CellGroupData[{ Cell[BoxData[ \(x\_11 = 3\)], "Input"], Cell[BoxData[ \(3\)], "Output"] }, Open ]], Cell[BoxData[ \(Clear[x\_11]\)], "Input"], Cell[BoxData[ \(x\_11 =. \)], "Input"], Cell["\<\ Once you have successfully cleared an association, and you try to do it again \ later (without having re-assigned any value to the variable), you may get an \ error message:\ \>", "Text"], Cell[BoxData[ \(x\_11 =. \)], "Input"], Cell["\<\ ...but that's OK. No harm done. It's better to clear often, so you don't risk \ carrying unwanted associations throughout your program. To clear multiple \ elements:\ \>", "Text"], Cell[CellGroupData[{ Cell[BoxData[ \({x = 3, y = 4, z = 6}\)], "Input"], Cell[BoxData[ \({3, 4, 6}\)], "Output"] }, Open ]], Cell[CellGroupData[{ Cell[BoxData[ \({x, y, z}\)], "Input"], Cell[BoxData[ \({3, 4, 6}\)], "Output"] }, Open ]], Cell[BoxData[ \(Clear[x, y, z]\)], "Input"], Cell[CellGroupData[{ Cell[BoxData[ \({x, y, z}\)], "Input"], Cell[BoxData[ \({x, y, z}\)], "Output"] }, Open ]], Cell["or, alternatively,", "Text"], Cell[BoxData[ \(\({x = 3, y = 4, z = 6};\)\)], "Input"], Cell[BoxData[ \(x =. ; \ y =. ; \ z =. ;\)], "Input"], Cell[CellGroupData[{ Cell[BoxData[ \({x, y, z}\)], "Input"], Cell[BoxData[ \({x, y, z}\)], "Output"] }, Open ]], Cell["\<\ Important: \"Clear\" only deletes numerical values associated with a \ variable, but not the variable itself. To completely erase a variable or \ functyion, use \"Remove\". This is especially important if you want to \ re-define a function (perhaps because you originally coded it wrong). As an \ example, let's use function \"g\" from above:\ \>", "Text"], Cell[CellGroupData[{ Cell[BoxData[ \(g[a, b]\)], "Input"], Cell[BoxData[ \(a\^2 + b\^2\)], "Output"] }, Open ]], Cell[BoxData[ \(Remove[g]\)], "Input"], Cell[CellGroupData[{ Cell[BoxData[ \(g[a, b]\)], "Input"], Cell[BoxData[ \(g[a, b]\)], "Output"] }, Open ]], Cell[TextData[{ "While for this function (and other simple examples), \"Clear\" would have \ done the job as well, ", StyleBox["it's always a good idea to \"Remove\" elements that you want to \ redefine.", FontWeight->"Bold"] }], "Text"] }, Closed]], Cell[CellGroupData[{ Cell[BoxData[ StyleBox[\(An\ \(Example : \ MWG\), \ Ex . \ 15. B .1, \ p . \ 519\), "Subsubtitle"]], "Input"], Cell["\<\ Define C/D utility functions in Log form (note: I will define these as \"pure\ \" funtions, with generic inputs. This allows the function to be used for any \ inputs, symbolic or numeric).\ \>", "Text"], Cell[BoxData[ \(\[Alpha] =. ; p\_2 =. ;\)], "Input"], Cell[BoxData[ \(\(U\_1[\(x\_11\) : _, \(x\_21\) : _] := Log[x\_11\^\[Alpha]*x\_21\^\(1 - \[Alpha]\)];\)\)], "Input"], Cell[BoxData[ \(\(U\_2[\(x\_12\) : _, \(x\_22\) : _] := Log[x\_12\^\[Alpha]*x\_22\^\(1 - \[Alpha]\)];\)\)], "Input"], Cell[TextData[{ "Note: ", StyleBox["For superscripts, press Cntrl+6, for subscripts, press Cntrl+-.", FontWeight->"Bold"], " To get back to \"normal font\", press the right hand arrow. You have to \ do this before evaluating any input. Now specify the remaining model inputs:\n\ Note: Instead of writing each definition as a separate cell, we can use", StyleBox[" lists:", FontWeight->"Bold"] }], "Text"], Cell[BoxData[ \(\({{\[Omega]\_11, \[Omega]\_21}, {\[Omega]\_12, \[Omega]\_22}} = {{1, 2}, {2, 1}};\)\)], "Input"], Cell[CellGroupData[{ Cell[BoxData[ \(\(\[Omega]\_1\)\&_ = \[Omega]\_11 + \[Omega]\_12\)], "Input"], Cell[BoxData[ \(3\)], "Output"] }, Open ]], Cell[CellGroupData[{ Cell[BoxData[ \(\(\[Omega]\_2\)\&_ = \[Omega]\_21 + \[Omega]\_22\)], "Input"], Cell[BoxData[ \(3\)], "Output"] }, Open ]], Cell[CellGroupData[{ Cell[BoxData[ \(\[ScriptCapitalL]\_1 = U\_1[x\_11, x\_21] + \[Lambda]\_1*\((p\_1*\[Omega]\_11 + p\_2*\[Omega]\_21 - p\_1*x\_11 - p\_2*x\_21)\)\)], "Input"], Cell[BoxData[ \(\((p\_1 + 2\ p\_2 - p\_1\ x\_11 - p\_2\ x\_21)\)\ \[Lambda]\_1 + Log[x\_11\%\[Alpha]\ x\_21\%\(1 - \[Alpha]\)]\)], "Output"] }, Open ]], Cell[TextData[{ "Note how ", StyleBox["Mathematica ", FontSlant->"Italic"], "replaces the \[Omega]-symbols with numerical values. This is always the \ case once numbers are assigned to symbols." }], "Text"], Cell[CellGroupData[{ Cell[BoxData[ \(\[ScriptCapitalL]\_2 = U\_2[x\_12, x\_22] + \[Lambda]\_2*\((p\_1*\[Omega]\_12 + p\_2*\[Omega]\_22 - p\_1*x\_12 - p\_2*x\_22)\)\)], "Input"], Cell[BoxData[ \(\((2\ p\_1 + p\_2 - p\_1\ x\_12 - p\_2\ x\_22)\)\ \[Lambda]\_2 + Log[x\_12\%\[Alpha]\ x\_22\%\(1 - \[Alpha]\)]\)], "Output"] }, Open ]], Cell["\<\ Now re-define or load in your G-function,as defined& saved above.Then you can \ take derivatives& set FOC's to zero all in 1 step.Note the double-equal sign \ required by the \"Solve\" command.Note the[[1]] at the end avoids a double \ {{}} for output& makes life easier later on.\ \>", "Text"], Cell[BoxData[ \(G[s_, vars_List] := Map[Function[{v}, D[s, v]], vars]\)], "Input"], Cell["or, if you have saved it before:", "Text"], Cell[BoxData[ \(<< V:\\Klaus\\APEC720\\Mtica\\code\\G\)], "Input"], Cell[CellGroupData[{ Cell[BoxData[ \(sol1 = \(Solve[ G[\[ScriptCapitalL]\_1, {x\_11, x\_21, \[Lambda]\_1}] \[Equal] 0, {x\_11, x\_21, \[Lambda]\_1}]\)[\([1]\)]\)], "Input"], Cell[BoxData[ \({\[Lambda]\_1 \[Rule] 1\/\(p\_1 + 2\ p\_2\), x\_11 \[Rule] \(\((p\_1 + 2\ p\_2)\)\ \[Alpha]\)\/p\_1, x\_21 \[Rule] \(p\_1 + 2\ p\_2 - p\_1\ \[Alpha] - 2\ p\_2\ \ \[Alpha]\)\/p\_2}\)], "Output"] }, Open ]], Cell[TextData[{ "The ", StyleBox["generic approach to solve FOC's", FontWeight->"Bold", FontColor->RGBColor[1, 0, 0]], StyleBox[" ", FontWeight->"Bold", FontColor->RGBColor[1, 0, 1]], "would involve the following 2 steps:" }], "Text"], Cell[CellGroupData[{ Cell[BoxData[ \({FOC\_1 = D[\[ScriptCapitalL]\_1, x\_11], FOC\_2 = D[\[ScriptCapitalL]\_1, x\_21], FOC\_3 = D[\[ScriptCapitalL]\_1, \[Lambda]\_1]}\)], "Input"], Cell[BoxData[ \({\[Alpha]\/x\_11 - p\_1\ \[Lambda]\_1, \(1 - \[Alpha]\)\/x\_21 - p\_2\ \[Lambda]\_1, p\_1 + 2\ p\_2 - p\_1\ x\_11 - p\_2\ x\_21}\)], "Output"] }, Open ]], Cell[CellGroupData[{ Cell[BoxData[ \(sol1alt = \(Solve[{FOC\_1 \[Equal] 0, FOC\_2 \[Equal] 0, FOC\_3 \[Equal] 0}, {x\_11, x\_21, \[Lambda]\_1}]\)[\([1]\)]\)], "Input"], Cell[BoxData[ \({\[Lambda]\_1 \[Rule] 1\/\(p\_1 + 2\ p\_2\), x\_11 \[Rule] \(\((p\_1 + 2\ p\_2)\)\ \[Alpha]\)\/p\_1, x\_21 \[Rule] \(p\_1 + 2\ p\_2 - p\_1\ \[Alpha] - 2\ p\_2\ \ \[Alpha]\)\/p\_2}\)], "Output"] }, Open ]], Cell[TextData[{ "The solution for ", Cell[BoxData[ \(TraditionalForm\`x\_11\)]], "is identical to the first element in the offer curve in MWG, p. 519, but \ the expression for ", Cell[BoxData[ \(TraditionalForm\`x\_21\)]], "appears to be different. Often times, this is just an issue of \ representation. Rarely will ", StyleBox["Mathematica", FontSlant->"Italic"], " produce results exactly in the form you would like them. Sometimes, \ \"Simplify\" can help. Note [%] refers to \"last evaluation\"." }], "Text"], Cell[CellGroupData[{ Cell[BoxData[ \(Simplify[%]\)], "Input"], Cell[BoxData[ \({\[Lambda]\_1 \[Rule] 1\/\(p\_1 + 2\ p\_2\), x\_11 \[Rule] \[Alpha] + \(2\ p\_2\ \[Alpha]\)\/p\_1, x\_21 \[Rule] \(-\(\(\((p\_1 + 2\ p\_2)\)\ \((\(-1\) + \[Alpha])\)\)\/p\_2\)\)}\)], \ "Output"] }, Open ]], Cell["\<\ Close enough - you will realize that these results are equivalent to the form \ given in the textbook. Let's optimize agent 2's problem. Note that we can do \ command and simplification all in one step.\ \>", "Text"], Cell[CellGroupData[{ Cell[BoxData[ \(Simplify[ sol2 = \(Solve[ G[\[ScriptCapitalL]\_2, {x\_12, x\_22, \[Lambda]\_2}] \[Equal] 0, {x\_12, x\_22, \[Lambda]\_2}]\)[\([1]\)]]\)], "Input"], Cell[BoxData[ \({\[Lambda]\_2 \[Rule] 1\/\(2\ p\_1 + p\_2\), x\_12 \[Rule] \(\((2\ p\_1 + p\_2)\)\ \[Alpha]\)\/p\_1, x\_22 \[Rule] \(-\(\(\((2\ p\_1 + p\_2)\)\ \((\(-1\) + \[Alpha])\)\)\/p\_2\)\)}\)], "Output"] }, Open ]], Cell[BoxData[ StyleBox[\(Generic\ \(\(approach\)\(:\)\)\), "Text", FontColor->RGBColor[1, 0, 0]]], "Input"], Cell[CellGroupData[{ Cell[BoxData[ \({FOC\_1 = D[\[ScriptCapitalL]\_2, x\_12], FOC\_2 = D[\[ScriptCapitalL]\_2, x\_22], FOC\_3 = D[\[ScriptCapitalL]\_2, \[Lambda]\_2]}\)], "Input"], Cell[BoxData[ \({\[Alpha]\/x\_12 - p\_1\ \[Lambda]\_2, \(1 - \[Alpha]\)\/x\_22 - p\_2\ \[Lambda]\_2, 2\ p\_1 + p\_2 - p\_1\ x\_12 - p\_2\ x\_22}\)], "Output"] }, Open ]], Cell[CellGroupData[{ Cell[BoxData[ \(sol2alt = Simplify[\(Solve[{FOC\_1 \[Equal] 0, FOC\_2 \[Equal] 0, FOC\_3 \[Equal] 0}, {x\_12, x\_22, \[Lambda]\_2}]\)[\([1]\)]]\)], "Input"], Cell[BoxData[ \({\[Lambda]\_2 \[Rule] 1\/\(2\ p\_1 + p\_2\), x\_12 \[Rule] \(\((2\ p\_1 + p\_2)\)\ \[Alpha]\)\/p\_1, x\_22 \[Rule] \(-\(\(\((2\ p\_1 + p\_2)\)\ \((\(-1\) + \[Alpha])\)\)\/p\_2\)\)}\)], "Output"] }, Open ]], Cell[TextData[{ "Now define offer curves for both agents. Note that ", StyleBox["Mathematica", FontSlant->"Italic"], " will NOT automatically interpret estimation results as actual \ definitions. So for example, at this point, the program \"doesn't \ understand\" that ", Cell[BoxData[ \(x\_11 = \[Alpha] + \(2\ \[Alpha]\ p\_2\)\/p\_1\)]], ". We need to define these optimal solutions from scratch, using cut & \ paste or - more conveniently, the replacement operator \"/.\": We'll denote \ equilibrium levels for x's with \"*\". That way we don't need to \"undo\" the \ optimality definition for the x's in later steps, where we just need the \ generic specifications." }], "Text"], Cell[CellGroupData[{ Cell[BoxData[ \({\(x\_11\^*\), \(x\_21\^*\)} = {x\_11, x\_21} /. sol1alt\)], "Input"], Cell[BoxData[ \({\(\((p\_1 + 2\ p\_2)\)\ \[Alpha]\)\/p\_1, \(p\_1 + 2\ p\_2 - p\_1\ \ \[Alpha] - 2\ p\_2\ \[Alpha]\)\/p\_2}\)], "Output"] }, Open ]], Cell[CellGroupData[{ Cell[BoxData[ \({\(x\_12\^*\), \(x\_22\^*\)} = {x\_12, x\_22} /. sol2alt\)], "Input"], Cell[BoxData[ \({\(\((2\ p\_1 + p\_2)\)\ \[Alpha]\)\/p\_1, \(-\(\(\((2\ p\_1 + p\_2)\)\ \((\(-1\) + \[Alpha])\)\)\/p\_2\)\)}\)], "Output"] }, Open ]], Cell[CellGroupData[{ Cell[BoxData[ \({OC\_1, OC\_2} = {{\(x\_11\^*\), \(x\_21\^*\)}, {\(x\_12\^*\), \(x\_22\^*\)}}\ \)], "Input"], Cell[BoxData[ \({{\(\((p\_1 + 2\ p\_2)\)\ \[Alpha]\)\/p\_1, \(p\_1 + 2\ p\_2 - p\_1\ \ \[Alpha] - 2\ p\_2\ \[Alpha]\)\/p\_2}, {\(\((2\ p\_1 + p\_2)\)\ \[Alpha]\)\/p\ \_1, \(-\(\(\((2\ p\_1 + p\_2)\)\ \((\(-1\) + \[Alpha])\)\)\/p\_2\)\)}}\)], \ "Output"] }, Open ]], Cell["\<\ To solve for the Walrasian equilibrium price ratio, we use the \"market \ clearing\" condition:\ \>", "Text"], Cell[CellGroupData[{ Cell[BoxData[ \(Solve[\(x\_11\^*\) + \(x\_12\^*\) == \(\[Omega]\_1\)\&_, p\_1]\)], "Input"], Cell[BoxData[ \({{p\_1 \[Rule] \(-\(\(p\_2\ \[Alpha]\)\/\(\(-1\) + \[Alpha]\)\)\)}}\)], \ "Output"] }, Open ]], Cell["\<\ With a bit of massaging we get the relationship 15.B.2 on p. 520. Let's check \ that both markets clear at these prices. Note the \"substitution\" operator, \ which is essentially the replacement operator \"/.\" in combination with \"->\ \"\ \>", "Text"], Cell[CellGroupData[{ Cell[BoxData[ \(check1 = Simplify[\(x\_11\^*\) + \ \(x\_12\^*\) - \(\[Omega]\_1\)\&_ /. p\_1 -> \(-\(\(\[Alpha]\ p\_2\)\/\(\(-1\) + \[Alpha]\)\)\)]\)], \ "Input"], Cell[BoxData[ \(0\)], "Output"], Cell[BoxData[ \(check2\ = \ Simplify[\(x\_21\^*\) + \ \(x\_22\^*\) - \(\[Omega]\_2\)\&_ /. p\_1 -> \(-\(\(\[Alpha]\ p\_2\)\/\(\(-1\) + \[Alpha]\)\)\)]\)], \ "Input"], Cell[BoxData[ \(0\)], "Output"] }, Open ]], Cell[TextData[{ "Note: Always make sure there is a space to the right and left of a \"+\" \ or \"-\" operator. This might be a v.5 glitch, but for some reason ", StyleBox["Mathematica", FontSlant->"Italic"], " did not create a space after the \"+\" in the check1=equation, so the \ operator was interpreted as multiplication. Just something to check if you \ get weird results." }], "Text", Background->RGBColor[1, 0.866667, 0.866667]], Cell["\<\ Now let's verify that the marginal rates of substitution are equal for both \ agents at equilibrium. We'll use the derivative function \"D\" for this step. \ Had we not used then \"*\" notation for the x's, we would now have to undo \ the optimality definition by simply clearing the x's:\ \>", "Text"], Cell[CellGroupData[{ Cell[BoxData[ \(MRS\_1 = \((D[U\_1[x\_11, x\_21], x\_11])\)/\((D[U\_1[x\_11, x\_21], x\_21])\)\)], "Input"], Cell[BoxData[ \(\(x\_21\ \[Alpha]\)\/\(x\_11\ \((1 - \[Alpha])\)\)\)], "Output"] }, Open ]], Cell[CellGroupData[{ Cell[BoxData[ \(MRS\_2 = \((D[U\_2[x\_12, x\_22], x\_12])\)/\((D[U\_2[x\_12, x\_22], x\_22])\)\)], "Input"], Cell[BoxData[ \(\(x\_22\ \[Alpha]\)\/\(x\_12\ \((1 - \[Alpha])\)\)\)], "Output"] }, Open ]], Cell[CellGroupData[{ Cell[BoxData[ \(check3 = \((MRS\_1/MRS\_2)\)\ /. {x\_11 -> \(x\_11\^*\), x\_21 -> \(x\_21\^*\), x\_12 -> \(x\_12\^*\), x\_22 -> \(x\_22\^*\)}\)], "Input"], Cell[BoxData[ \(\(-\(\(p\_1 + 2\ p\_2 - p\_1\ \[Alpha] - 2\ p\_2\ \[Alpha]\)\/\(\((p\_1 + 2\ p\_2)\)\ \((\(-1\) + \[Alpha])\)\)\)\)\)], "Output"] }, Open ]], Cell[CellGroupData[{ Cell[BoxData[ \(Simplify[%]\)], "Input"], Cell[BoxData[ \(1\)], "Output"] }, Open ]], Cell[BoxData[ StyleBox["Graphs", "Subsubtitle"]], "Input"], Cell[TextData[{ "To show this \"story\" graphically, we need to assign numerical values to \ the remaining exogenous elements, in this case the Cobb-Douglas exponents. \ Also, since only relative prices are identified in this system, we're \ following standard convention by setting ", Cell[BoxData[ \(TraditionalForm\`p\_2 = 1\)]], ". Let's solve for equilibrium price ", Cell[BoxData[ \(TraditionalForm\`p\_1\)]], " using these numerical assignments and above results. Remember, v.5.0 \ requires use of fractions for exponents to avoid problems later." }], "Text"], Cell[BoxData[ \(\({\[Alpha] = 1/5, p\_2 = 1};\)\)], "Input"], Cell[CellGroupData[{ Cell[BoxData[ \(\(p\_1\^*\) = N[\(-\(\(\[Alpha]\ p\_2\)\/\(\(-1\) + \[Alpha]\)\)\)]\)], "Input"], Cell[BoxData[ \(0.25`\)], "Output"] }, Open ]], Cell["\<\ As in Stinespring (p.84),we'll only show indifference curves associated with \ the original (endowment) urilities,and utilities at equilibrium. Note that, \ as expected, utilities are higher in equilibrium compared to endowment. The \ \"N[]+ function returns actual numbers (as opposed to decimals , \ Log-expressions etc).\ \>", "Text"], Cell[CellGroupData[{ Cell[BoxData[ \(N[{V\_1 = U\_1[\[Omega]\_11, \[Omega]\_21], \(V\_1\^*\) = U\_1[\(x\_11\^*\), \(x\_21\^*\)]} /. p\_1 -> \(p\_1\^*\)]\)], "Input"], Cell[BoxData[ \({0.5545177444479562`, 0.5877866649021194`}\)], "Output"] }, Open ]], Cell[CellGroupData[{ Cell[BoxData[ \(N[{V\_2 = U\_2[\[Omega]\_12, \[Omega]\_22], \(V\_2\^*\) = U\_2[\(x\_12\^*\), \(x\_22\^*\)]} /. p\_1 -> \(p\_1\^*\)]\)], "Input"], Cell[BoxData[ \({0.13862943611198905`, 0.1823215567939548`}\)], "Output"] }, Open ]], Cell["\<\ Let's plot the indifference curves for both individuals at these two \ U-levels. 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