Multiple Choice
Patience has a utility function U(c1, c2) =c1/21 + .087c1/22, 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) 0.75
B) 0
C) 0.08
D) 0.15
E) 0.23
Correct Answer:
Verified
Correct Answer:
Verified
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