I always want to consume equal amounts today and tomorrow and the interest rate at which I can borrow and lend is 5%. I will spend 5% more on consumption today than on consumption tomorrow. I have right-angle (L-shaped) indifference curves. My intertemporal indifference curves are straight lines with slope -1. I will spend 5% more on consumption tomorrow than on consumption today. I will spend all of my current and future income on consumption today.
I always want to consume equal amounts today and tomorrow and the interest rate at which I can borrow and lend is 5%. I will spend 5% more on consumption today than on consumption tomorrow. I have right-angle (L-shaped) indifference curves. My intertemporal indifference curves are straight lines with slope -1. I will spend 5% more on consumption tomorrow than on consumption today. I will spend all of my current and future income on consumption today.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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