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The diagram depicts Julia's choice of consumption in periods 1 and 2. She has no income in period 1 and an income of $100 in period 2. Based on this information, which of the following statements is correct? Julia's endowment 100 67 23 Feasible frontier (10% interest rate) Feasible frontier (78% interest rate) 30 56 70 91 Consumption now (S) Select one: o a. When the interest rate is 78%, the maximum that Julia can borrow in period 1 is $56 (rounded to the nearest dollar). O b. When the interest rate is 78%, a consumption plan of $30 in period 1 and $67 in period 2 is in Julia's feasible set c. When the interest rate is 10%, the marginal rate of transformation of goods from period 2 to period 1 is 0.1 O d. When the interest rate is 10%, if Julia borrows $23 in period 1 then she can consume $70 in period 2 Consumption later ($)

The diagram depicts Julia's choice of consumption in periods 1 and 2. She has no income in period 1 and an income of $100 in period 2. Based on this information, which of the following statements is correct? Julia's endowment 100 67 23 Feasible frontier (10% interest rate) Feasible frontier (78% interest rate) 30 56 70 91 Consumption now (S) Select one: o a. When the interest rate is 78%, the maximum that Julia can borrow in period 1 is $56 (rounded to the nearest dollar). O b. When the interest rate is 78%, a consumption plan of $30 in period 1 and $67 in period 2 is in Julia's feasible set c. When the interest rate is 10%, the marginal rate of transformation of goods from period 2 to period 1 is 0.1 O d. When the interest rate is 10%, if Julia borrows $23 in period 1 then she can consume $70 in period 2 Consumption later ($)

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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The diagram depicts Julia's choice of consumption in periods 1 and 2. She has no income in period 1 and an income of $100 in period 2. Based on this information, which of the following statements is correct? Julia's endowment 100 67 23 Feasible frontier (10% interest rate) Feasible frontier (76% interest rate) 30 56 70 91 Consumption now (S) Select one: o a. When the interest rate is 78%, the maximum that Julia can borrow in period 1 is $56 (rounded to the nearest dollar). O b. When the interest rate is 78%, a consumption plan of $30 in period 1 and $67 in period 2 is in Julia's feasible set O C. When the interest rate is 10%, the marginal rate of transformation of goods from period 2 to period1 is 0.1 O d. When the interest rate is 10%, if Julia borrows $23 in period 1 then she can consume $70 in period 2 Consumption later ($)
Transcribed Image Text:The diagram depicts Julia's choice of consumption in periods 1 and 2. She has no income in period 1 and an income of $100 in period 2. Based on this information, which of the following statements is correct? Julia's endowment 100 67 23 Feasible frontier (10% interest rate) Feasible frontier (76% interest rate) 30 56 70 91 Consumption now (S) Select one: o a. When the interest rate is 78%, the maximum that Julia can borrow in period 1 is $56 (rounded to the nearest dollar). O b. When the interest rate is 78%, a consumption plan of $30 in period 1 and $67 in period 2 is in Julia's feasible set O C. When the interest rate is 10%, the marginal rate of transformation of goods from period 2 to period1 is 0.1 O d. When the interest rate is 10%, if Julia borrows $23 in period 1 then she can consume $70 in period 2 Consumption later ($)
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