Assume Marjeri lives for only two periods and has the utility function U(C1, C2) = In C1 + 0.9 In C2 She can save or borrow any amount at an interest rate of 8%. Her income in each period is $10,000. How much should she consume in each period in order to maximize her utility? How much will she save or borrow?

Assume Marjeri lives for only two periods and has the utility function U(C1, C2) = In C1 + 0.9 In C2 She can save or borrow any amount at an interest rate of 8%. Her income in each period is $10,000. How much should she consume in each period in order to maximize her utility? How much will she save or borrow?

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter17: Capital And Time

Section: Chapter Questions

Problem 17.3P

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