MrOBKandle Has a Utility Function C₁c₂, Where C₁ Is His

question 9

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 $70,000 in period 1 and the interest rate increased from 10 to 16%,

• A)his savings would increase by 6% and his consumption in period 2 would also increase.
• B)his consumption in both periods would decrease.
• C)his savings would not change but his consumption in period 2 would increase by 2,100.
• D)his consumption in both periods would increase.
• E)his consumption in period 1 would decrease by 16% and his consumption in period 2 would also decrease.

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Definitions:

Discount Period

The discount period is the timeframe during which a discount is offered for early payment on goods or services, often used to incentivize quicker payment by customers.

Sales Discounts

Reductions in the price of goods or services offered to customers to encourage prompt payment.

Accounts Receivable

The amount customers are required to pay to a company for already delivered services or products.

FOB Shipping Point

A term used in shipping agreements indicating the buyer is responsible for the goods and shipping costs as soon as they leave the seller's premises.