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

question 8

Multiple Choice

Harvey Habit in Problem 9 has a utility function U(c₁, c₂) = min{c₁, c₂}. If he had an income of $440 in period 1 and $880 in period 2 and if the interest rate were 20%, how much would Harvey choose to spend on bread in period 1?

• A) $1,280
• B) $320
• C) $213.33
• D) $960
• E) $640

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