Two period consumption model

ProfArgeol
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In the two-period consumption model, suppose that Y1 = 100 and Y2 = 210. There is no initial wealth. If the utility function of the individual is U = log(C1) + .9 log(C2) and the interest rate is 5%, what are C1 and C2? How would your answer change if U = log(C1) + log(C2)? Explain in words why the change would happen

    • 12 years ago
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    • two-period_consumption_model.docx