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

question 12

Multiple Choice

Harvey Habit has a utility function U(c1, c2) =min{c₁, c₂}.If he had an income of $880 in period 1 and $1,320 in period 2 and if the interest rate were 0.20, how much would Harvey choose to spend on bread in period 1?

• A)$1,620
• B)$360
• C)$540
• D)$2,160
• E)$1,080

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Definitions:

Significant Liability(ies)

Refers to considerable financial obligations or debts that a company or individual has, which may impact their financial stability or creditworthiness.

Loans And Leases

Financial arrangements where loans involve borrowing money that must be repaid with interest, while leases involve paying for the use of an asset for a specified period.

Deposits

Funds placed into an account at a financial institution for safekeeping and potential interest earnings.

Investment Securities

Financial instruments purchased with the aim of generating income or appreciating in value, such as stocks, bonds, and mutual funds.