Patience Has a Utility Function U(c₁, C₂)= C^1/2₁ + 0

question 5

Multiple Choice

Patience has a utility function U(c₁, c₂) = c^1/2₁ + 0.80c^1/2₂, where c₁ is her consumption in period 1 and c₂ is her consumption in period 2.Her income in period 1 is twice 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
• B)0.25
• C)0.13
• D)0.50
• E)0.38

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Definitions:

Lower Class

A socioeconomic group characterized by lower income, limited access to resources and opportunities, often facing economic and social challenges.

The Poor

Individuals or groups who lack the financial resources to meet a standard of living considered normal or comfortable in their society.

Social Class Ladder

A system of social stratification based on income, wealth, education, and occupation, which affects individuals' opportunities and social status.

Intersection

A concept often used in sociology to describe the ways in which social categories such as race, gender, and class interact on multiple and often simultaneous levels, contributing to systematic social inequality.