Assume Marjeri lives for only two periods and has the utility function U(C1, C2) = In C1 + 0.9 In C2 She can save or borrow any amount at an interest rate of 8%. Her income in each period is $10,000. How much should she consume in each period in order to maximize her utility? How much will she save or borrow?

Assume Marjeri lives for only two periods and has the utility function U(C1, C2) = In C1 + 0.9 In C2 She can save or borrow any amount at an interest rate of 8%. Her income in each period is $10,000. How much should she consume in each period in order to maximize her utility? How much will she save or borrow?

Microeconomics A Contemporary Intro

10th Edition

ISBN:9781285635101

Author:MCEACHERN

Publisher:MCEACHERN

Chapter13: Capital, Interest, Entrepreneurship, And Corporate Finance

Section: Chapter Questions

Problem 11PAE

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