Your parents give you an allowance of 100 pounds for this year and 110 for the next. Credit markets are perfect, and the interest rate is 10%. You are planning your consumption for this year, co, and for the next year, c. Your utility from a consumption plan (co, c1) is given by U(co, C1) = c,ºcz1-0.where e is between zero and one. %3D a. Write down the expression of your budget constraint for consumption plans (co, c1) for current and next year. Compute the MRS between Co and c, as a function of 0. b.

Your parents give you an allowance of 100 pounds for this year and 110 for the next. Credit markets are perfect, and the interest rate is 10%. You are planning your consumption for this year, co, and for the next year, c. Your utility from a consumption plan (co, c1) is given by U(co, C1) = c,ºcz1-0.where e is between zero and one. %3D a. Write down the expression of your budget constraint for consumption plans (co, c1) for current and next year. Compute the MRS between Co and c, as a function of 0. b.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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