Doug's Present and Future Consumption Are Perfect Substitutes

question 74

Essay

Doug's present and future consumption are perfect substitutes. He does however discount future consumption by a bit. His utility function is
U(C₀,C₁)= C₀ + C₁/(1 + a)where a is the discount rate he applies to C₁.
i)What is the shape of Doug's indifference curves?
ii)Show that if i exceeds a then C₀ = 0.
iii)Show that if i<a then C₁ = 0.

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Definitions:

Undifferentiated Targeting Strategy

A marketing approach where a company decides to ignore market segment differences and appeal to the whole market with one offer or product.

Mass-Marketing

Mass-marketing refers to a marketing strategy that aims to appeal to a large audience by using channels that reach a wide and diverse group of consumers simultaneously.

Segmenting And Positioning

The process of dividing a market into distinct groups of buyers and tailoring marketing strategies to meet their needs.

Positing

involves placing something firmly or putting forward an assertion, belief, or theory for consideration.