(ii) Assume that you have an income of £20,000 in each of two periods (1 and 2) and can lend and borrow at a 10% rate. Suppose your utility function is: U(C,C,)= 50+C, +C, +C,C, (a) What is your opportunity set? (b) Calculate the optimum amount of consumption in each period.
(ii) Assume that you have an income of £20,000 in each of two periods (1 and 2) and can lend and borrow at a 10% rate. Suppose your utility function is: U(C,C,)= 50+C, +C, +C,C, (a) What is your opportunity set? (b) Calculate the optimum amount of consumption in each period.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
![(ii)
Assume that you have an income of £20,000 in each of two periods (1 and 2) and
can lend and borrow at a 10% rate. Suppose your utility function is:
U(C,C,)= 50+C, +C, +C,C,
(a)
What is your opportunity set?
(b)
Calculate the optimum amount of consumption in each period.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ff3b8e68f-3309-475d-aa8e-1dccd17db797%2F060f47f8-48b2-4c2d-b074-2b1deda966df%2Fydq5e8n_processed.jpeg&w=3840&q=75)
Transcribed Image Text:(ii)
Assume that you have an income of £20,000 in each of two periods (1 and 2) and
can lend and borrow at a 10% rate. Suppose your utility function is:
U(C,C,)= 50+C, +C, +C,C,
(a)
What is your opportunity set?
(b)
Calculate the optimum amount of consumption in each period.
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