Patience has a utility function 1/2 1/2 U(cl, c2) = c² + 0.80c where c is her consumption in period 1 and c is her consumption in period 2. Her income in period 1 is 3 times as large as her income in period 2. At what interest rate will she choose to consume the same amount in period 1 as in period 2? а. 2 b. 0.13 c. 0.25 d. 0 е. О.38 20% 13% 25% 0%

Patience has a utility function 1/2 1/2 U(cl, c2) = c² + 0.80c where c is her consumption in period 1 and c is her consumption in period 2. Her income in period 1 is 3 times as large as her income in period 2. At what interest rate will she choose to consume the same amount in period 1 as in period 2? а. 2 b. 0.13 c. 0.25 d. 0 е. О.38 20% 13% 25% 0%

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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