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:

Colloquial Words

Words or expressions used informally in everyday speech rather than in more formal language or writing.

Linear-Actives

Linear-Actives describe a cultural communication style characterized by directness, logic, and a systematic approach to tasks and interactions, focusing on organization and planning.

Multi-Actives

Describes individuals or cultures that engage in multiple activities simultaneously, often valuing personal interactions and fluid schedules over strict time management.

Reactives

Substances or entities that undergo a chemical reaction or a response in particular situations or under specific conditions.