I always thought my good friend Rado Coetzee was quite original given his choices. He then once told me his utility function was U(c1,c2) = min {c1,c2} where cị and c2 are his consumption in period 1 and 2 respectively. I know in the first period he earns $105 thousand and $168 thousand in period 2. Rado can borrow or lend at an interest rate of 10%. Inflation is negligible. What will he do? a) Rado will borrow 30 thousand dollars b) Rado will save 133 thousand dollars c) Rado will save 30 thousand dollars d) Rado will save all his money, buy a BMW X5 in Luxembourg, tax free, and never let his wife Inga drive it. e) None of the above

I always thought my good friend Rado Coetzee was quite original given his choices. He then once told me his utility function was U(c1,c2) = min {c1,c2} where cị and c2 are his consumption in period 1 and 2 respectively. I know in the first period he earns $105 thousand and $168 thousand in period 2. Rado can borrow or lend at an interest rate of 10%. Inflation is negligible. What will he do? a) Rado will borrow 30 thousand dollars b) Rado will save 133 thousand dollars c) Rado will save 30 thousand dollars d) Rado will save all his money, buy a BMW X5 in Luxembourg, tax free, and never let his wife Inga drive it. e) None of the above

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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