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

---

Definitions:

Communications Board

A visual aid used by individuals who are unable to speak or write, facilitating communication through pictures, symbols, or words.

Autism Spectrum Disorder

A developmental disorder characterized by difficulties in social interaction and communication along with restricted or repetitive patterns of thought and behavior.

Group Home

A residential facility where people with disabilities or special needs live together under supervision, typically in a family-like setting.

Community

a group of people living in the same place or having a particular characteristic in common.