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

question 30

Multiple Choice

Patience has a utility function U(c₁, c₂) c^1/2₁ + 0.83c^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)0.40
• B)0.10
• C)0.20
• D)0
• E)0.30

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