Harvey Habit in Problem 9 Has a Utility Function U(c₁

question 12

Multiple Choice

Harvey Habit in Problem 9 has a utility function U(c₁, c₂) = min{c₁, c₂}. If he had an income of $645 in period 1 and $1,290 in period 2 and if the interest rate were 15%, how much would Harvey choose to spend on bread in period 1?

• A) $1,417.50
• B) $315
• C) $1,890
• D) $472.50
• E) $945

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Definitions:

Stretchable

Capable of being extended or stretched without breaking or losing shape.

Comfort Zone

A behavioral state within which a person operates in an anxiety-neutral condition, using a limited set of behaviors.

Individual Job Performance

The level at which an employee fulfills their job responsibilities and tasks, often measured against predefined standards.

Reducing Behaviors

Actions taken to decrease the frequency or intensity of certain behaviors or habits.