Elijah has a utility function U(c1, c2) = min{c1, c2}, where cl and c2 are his consumption in periods 1 and 2 respectively. Elijah earns £190 in period 1 and he will earn £70 in period 2. Elijah can borrow or lend at an interest rate of 5%. There is no inflation. Select one: O a. Elijah will save about £58.53. O b. Elijah will save about £61.46. O c. None of the above. O d. Elijah will neither borrow nor lend. O e. Elijah will borrow about £58.53.

Elijah has a utility function U(c1, c2) = min{c1, c2}, where cl and c2 are his consumption in periods 1 and 2 respectively. Elijah earns £190 in period 1 and he will earn £70 in period 2. Elijah can borrow or lend at an interest rate of 5%. There is no inflation. Select one: O a. Elijah will save about £58.53. O b. Elijah will save about £61.46. O c. None of the above. O d. Elijah will neither borrow nor lend. O e. Elijah will borrow about £58.53.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter17: Capital And Time

Section: Chapter Questions

Problem 17.3P

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