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Patience Has a Utility Function U(c1, C2) , Where

Question 1

Multiple Choice

Patience has a utility function U(c1, c2) Patience has a utility function U(c<sub>1</sub>, c<sub>2</sub>) , where c<sub>1</sub> is her consumption in period 1 and c<sub>2</sub> is her consumption in period 2. Her income in period 1 is 5 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? A) 0.10 B) 0 C) 1 D) 0.20 E) 0.30 , where c1 is her consumption in period 1 and c2 is her consumption in period 2. Her income in period 1 is 5 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?


A) 0.10
B) 0
C) 1
D) 0.20
E) 0.30

Correct Answer:

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