Refer to the Following Figure When Answering
Figure $c _ { 1 }$

question 86

Multiple Choice

Refer to the following figure when answering
Figure 16.2: Consumption Function
-In Figure 16.2, point c is equal to the ________ and implies ________.

• A) utility of the average of \(c _ { 1 }\) and \(c _ { 2 }\) ; consumption smoothing
• B) utility associated with consuming \(c _ { 1 }\) ; risk neutrality
• C) utility of consumption; Ricardian equivalence
• D) average utility of \(c _ { 1 }\) and \(c _ { 2 }\) ; a borrowing constraint
• E) utility of the average of \(c _ { 1 }\) and \(c _ { 2 }\) ; a low discount factor

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Definitions:

Breach of Contract

The violation of any of the agreed-upon terms and conditions of a binding contract. This breach could involve not performing on time, not performing in accordance with the terms of the agreement, or not performing at all.

Impracticable

Not possible to do or carry out in practice, either due to technical, legal, or other constraints.

Contingency

A future event or circumstance that is possible but cannot be predicted with certainty and may affect the outcome of a legal agreement.

Express Warranty

Any description of a good’s physical nature or its use, in either general or specific circumstances, that becomes part of a contract.