Patience Has a Utility Function U(c₁, C₂)= C^1/2₁

question 12

Multiple Choice

Patience has a utility function U(c₁, c₂) = c^1/2₁ + .083c^1/2₂, where c₁ is her consumption in period 1 and c₂ is her consumption in period 2.Her income in period 1 is 5 times as large as her income in period 2.At what interest rate will she choose to consume the same amount in period 1 as in period 2?

• A)0.10
• B)0
• C)1
• D)0.20
• E)0.30

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Definitions:

Monetary Bribes

Illegal or unethical payments made to influence someone's actions or decisions.

Prison Rules

Regulations and guidelines that govern behavior and procedures within correctional facilities to maintain order and safety.

Mass Incarceration

The substantial increase in the number of individuals imprisoned in the United States, starting in the last quarter of the 20th century.

Policies

Deliberate plans of action, guidelines, or principles designed to influence and determine decisions, actions, and other matters.