Assume Peter's preferences over time (periods are yearly) are given by U(c1, C2, C3, C4, · ...) = ln(c1) + Bln(c2) + B²ln(c3)+... Assume that Peter can borrow or lend at the same rate r=10% and 1 B = 1.15 Then, we know the following about how Peters consumption changes over time: Peters consumption declines the older he gets. Peters consumption increases the older he gets Peters consumption is constant over his life-time We can't tell anything about his consumption level because we have not been given any information about his income over his life-time.

Assume Peter's preferences over time (periods are yearly) are given by U(c1, C2, C3, C4, · ...) = ln(c1) + Bln(c2) + B²ln(c3)+... Assume that Peter can borrow or lend at the same rate r=10% and 1 B = 1.15 Then, we know the following about how Peters consumption changes over time: Peters consumption declines the older he gets. Peters consumption increases the older he gets Peters consumption is constant over his life-time We can't tell anything about his consumption level because we have not been given any information about his income over his life-time.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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ANSWER BOTH C & D
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