Will Wisp Will Live for Exactly Two Periods

question 3

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 $40,000.If the interest rate rises from 10 to 14%:

• A)his savings will increase by 4% and his consumption in period 2 will increase.
• B)his consumption in both periods will increase.
• C)his consumption in both periods will decrease.
• D)his savings will not change but his consumption in period 2 will increase by $800.
• E)his consumption in period 1 will decrease by 14% and his consumption in period 2 will increase.

---

Definitions:

Graphic Devices

Visual elements such as charts, diagrams, and illustrations used to represent information or concepts.

Response Message

A response message is a reply or reaction to an initial communication or request, often used in both personal and professional settings to provide information, clarification, or decisions.

Adjustment Message

A type of communication in business meant to address and resolve a customer complaint or issue.

Future Business

Refers to the prospects, plans, and innovations that aim to ensure the growth and sustainability of a business in upcoming years.