intertemporal consumption Norman Bates is a rational economic agent who allocate
ID: 1197196 • Letter: I
Question
intertemporal consumption
Norman Bates is a rational economic agent who allocates consumption during two periods (c_1 and c_2). He splits 16 hours a day between managing the Bates Motel (work) and taking care of his mother (leisure). His preferences over consumption and leisure, and his intertemporal consumption are given by: U_i(c_i, l_i) = min {72l_i, 8c_i} i = 1,2 U (c_1, c_2) = c_1^2 c_2 His wage is $4 the hour and he receives an allowance of $40 each day from his mother (independent of the hours he works). If the interest rate is 15%, he will spend hours looking after his mother and will borrow .Explanation / Answer
Answer A-8,$17.74
Intertemporal choice we means that the study of how people makes choice at various time periods. It seeks to explain Peoples relations into consumption and savings.
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