(Answered)-The transition equation is modified so that Wt+1 = a Wt ct, - (2025 Updated Original AI-Free Solution

Question

1. The?transition?equation?is?modified?so?that?Wt+1?=?a?Wt???ct,?where?a?>0?represents?a?return?from?holding?cake?inventories.
2. Interpret the first order condition. Derive Euler equation for T-period problem with this storage technology. Does the size of a matter for the consumption path?