A Widely Used Utility Function in the Economics Literature Is $\gamma$

question 38

Essay

A widely used utility function in the economics literature is the constant rate of risk aversion utility function, of which log utility is a special case. It is given by
.
With this utility function, the marginal utility of consumption is c ^{- $\gamma$} . What is the Euler equation for this utility function? Show that if
, the Euler equation is the same as if we used log utility.

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Definitions:

Fixed Expenses

Costs that remain constant for a given period regardless of the level of production or sales volume.

Break-Even

The point at which total costs and total revenue are equal, resulting in no net loss or gain for the business.

Photo-Prints

Physical prints of photographs, typically produced from digital images or negatives.

Break-Even Point

The point at which total costs and total revenue are equal, and no profit or loss is generated.