A consumer has a utility function U (c,es) = min {2c,c2}, where c and cz are his consumption in periods 1 and 2 respectively. He earns $200 in period 1 and he will earn $80 in period 2. The interest rate at the market is 20% and there is no inflation. (a) He will neither borrow nor lend. (b) He will save $100 (c) He will borrow $50. (d) He will save $50. (e) He will borrow $100

A consumer has a utility function U (c,es) = min {2c,c2}, where c and cz are his consumption in periods 1 and 2 respectively. He earns $200 in period 1 and he will earn $80 in period 2. The interest rate at the market is 20% and there is no inflation. (a) He will neither borrow nor lend. (b) He will save $100 (c) He will borrow $50. (d) He will save $50. (e) He will borrow $100

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

ChapterB: Differential Calculus Techniques In Management

Section: Chapter Questions

Problem 7E

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