MrOBKandle Has a Utility Function C₁c₂, Where C₁ Is His

question 10

Multiple Choice

Mr.O.B.Kandle has a utility function c₁c₂, where c₁ is his consumption in period 1 and c₂ is his consumption in period 2.He has no income in period 2.If he had an income of $50,000 in period 1 and the interest rate increased from 10 to 15%,

• A)his savings would increase by 5% and his consumption in period 2 would also increase.
• B)his savings would not change but his consumption in period 2 would increase by 1,250.
• C)his consumption in both periods would increase.
• D)his consumption in both periods would decrease.
• E)his consumption in period 1 would decrease by 15% and his consumption in period 2 would also decrease.

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Definitions:

Equity

The principle of fairness and justice in the allocation of resources, opportunities, and treatment of individuals and groups, aiming to address systemic inequalities.

Merit

A quality of being particularly good or worthy, typically used to acknowledge or reward someone's achievement or quality.

Benevolence

The quality of being well-meaning; kindness or the desire to do good and act generously towards others.

Prosocial Behavior

Voluntary behavior intended to benefit another person, such as helping, sharing, or providing comfort.