Assume that a consumer's utility over two years is a function of consumption during the twe years. Let the consumer's utility function be U(C.C) = In C + 3 In C2. where Ci is consumption during the 1st year, and C2 is the consumption during the 2nd year The consumer's income is Y, during the Ist year and Y, during the 2nd year. Let R denote the annual interest rate (0 < R< 20%), at which the consumer can choose te borrow or lend across the two years. The consumer's budget constraint is

Assume that a consumer's utility over two years is a function of consumption during the twe years. Let the consumer's utility function be U(C.C) = In C + 3 In C2. where Ci is consumption during the 1st year, and C2 is the consumption during the 2nd year The consumer's income is Y, during the Ist year and Y, during the 2nd year. Let R denote the annual interest rate (0 < R< 20%), at which the consumer can choose te borrow or lend across the two years. The consumer's budget constraint is

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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