Suppose a consumer lives in two periods, with his income in period 1 as $100 and his income in period 2 as $150. If the rate of interest in the economy is 12%. Find the equilibrium level of consumption in both the periods(C1*,C2*) if his utility function is given as: U = C10.5C20.5.

Suppose a consumer lives in two periods, with his income in period 1 as $100 and his income in period 2 as $150. If the rate of interest in the economy is 12%. Find the equilibrium level of consumption in both the periods(C1,C2) if his utility function is given as: U = C10.5C20.5.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter5: Income And Substitution Effects

Section: Chapter Questions

Problem 5.6P

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Question

Suppose a consumer lives in two periods , with his income in period 1 as $100 and his income in period 2 as $150. If the rate of interest in the economy is 12%. Find
the equilibrium level of consumption in both the periods(C1*,C2*) if his utility function is given as: U = C10.5C20.5.
(125 ,125)
(138.17, 110.54)
(90.54 , 180.84)
(110.54 , 138.17)

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