Multiple Choice
Patience has a utility function U(c1, c2) c1/21 + 0.83c1/22, where c1 is her consumption in period 1 and c2 is her consumption in period 2.Her income in period 1 is twice 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) 0.40
B) 0.10
C) 0.20
D) 0
E) 0.30
Correct Answer:
Verified
Correct Answer:
Verified
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