MrOBKandle Has a Utility Function C₁c₂, Where C₁ Is

question 14

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 $40,000 in period 1 and the interest rate increased from 10 to 12%,

• A)his consumption in both periods would increase.
• B)his savings would increase by 2% and his consumption in period 2 would also increase.
• C)his consumption in both periods would decrease.
• D)his savings would not change but his consumption in period 2 would increase by 400.
• E)his consumption in period 1 would decrease by 12% and his consumption in period 2 would also decrease.

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Definitions:

Proposition

A statement that expresses a judgment or opinion that can be either true or false.

Relationship

The manner by which two or more ideas, items, or individuals are linked together, or the condition of being linked.

Contrapositives

Logical statements that are derived by inverting and negating both the antecedent and the consequent of an original implication; often used in logical proofs.

Relationship

A connection, association, or involvement between two or more entities.