Will Wisp Will Live for Exactly Two Periods

question 6

Multiple Choice

Will Wisp will live for exactly two periods.His utility function is U(c₁, c₂) = c₁c₂, where c₁ is consumption in period 1 and c₂ is consumption in period 2.He will have no income in period 2.His income in period 1 is $80,000.If the interest rate rises from 10 to 12%:

• A)his savings will increase by 2% and his consumption in period 2 will increase.
• B)his savings will not change but his consumption in period 2 will increase by $800.
• C)his consumption in both periods will increase.
• D)his consumption in both periods will decrease.
• E)his consumption in period 1 will decrease by 12% and his consumption in period 2 will increase.

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Definitions:

Distinct Stages

Refers to clear, separate phases that an entity or process passes through in a specific sequence.

Sociologists

Professionals who study society and social behavior by examining the groups, cultures, organizations, social institutions, and processes that people develop.

Formative Experiences

Refers to significant events, stages, or interactions in an individual's early life that play a crucial role in shaping their character, beliefs, and behavior.

Age Stratification

The hierarchical ranking and division of society into groups based on age, affecting access to resources and power.