Harvey Habit Has a Utility Function U(c₁, C₂)= Min{c₁, C₂}

question 25

Multiple Choice

Harvey Habit 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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