Consumer's utility function for consumption levels in two periods, c and ca2, is min(2c1, c). The (non-negative) interest rate is r and there is no inflation. The income is 100 in the first period and 20 in the second period. If the consumer behaves optimally, what is the smallest level of consumption in period 1? What is the largest level of consumption in period 1? Explain your reasoning.

Consumer's utility function for consumption levels in two periods, c and ca2, is min(2c1, c). The (non-negative) interest rate is r and there is no inflation. The income is 100 in the first period and 20 in the second period. If the consumer behaves optimally, what is the smallest level of consumption in period 1? What is the largest level of consumption in period 1? Explain your reasoning.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter17: Capital And Time

Section: Chapter Questions

Problem 17.3P

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