An individual has two employment opportunities involving the same work conditions but different incomes. Job 1 yields 50 in year 1, and 30 in year 2. Job 2 yields 40 in year 1 and 40 in year 2. The markets are perfect and bonds yield 5%. la. If you consume everything in year 1, how much more could you consume from Job 1 than Job 2? 1b. If you consume everything in year 2, how much more could you consume from Job 2 than Job 1?

Essentials Of Investments
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ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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An individual has two employment
opportunities involving the same work
conditions but different incomes.
Job 1 yields 50 in year 1, and 30 in year 2.
Job 2 yields 40 in year 1 and 40 in year 2.
The markets are perfect and bonds yield
5%.
la. If you consume everything in year 1,
how much more could you consume from
Job 1 than Job 2?
1b. If you consume everything in year 2,
how much more could you consume from
Job 2 than Job 1?
Transcribed Image Text:An individual has two employment opportunities involving the same work conditions but different incomes. Job 1 yields 50 in year 1, and 30 in year 2. Job 2 yields 40 in year 1 and 40 in year 2. The markets are perfect and bonds yield 5%. la. If you consume everything in year 1, how much more could you consume from Job 1 than Job 2? 1b. If you consume everything in year 2, how much more could you consume from Job 2 than Job 1?
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