Suppose a consumer who has to decide if she wants to go to pro or not. If she does NOT go, she will get a low income in both periods, Y1, Y2. If she goes pro, she will get a higher wage in the first period Y > Y1. In the second period, she will have NO income (Y, = 0) and, in addition, she will have to pay and extra amount S to sustain her fancy lifestyle in the second period. She has increasing and concave preferences over consumption in the two periods (C1 and C2) Consider first that she does not go pro

Suppose a consumer who has to decide if she wants to go to pro or not. If she does NOT go, she will get a low income in both periods, Y1, Y2. If she goes pro, she will get a higher wage in the first period Y > Y1. In the second period, she will have NO income (Y, = 0) and, in addition, she will have to pay and extra amount S to sustain her fancy lifestyle in the second period. She has increasing and concave preferences over consumption in the two periods (C1 and C2) Consider first that she does not go pro

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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