Find person-s marginal rate of substitution of consumption, Microeconomics

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Find person-s marginal rate of substitution of consumption

Suppose a person has a utility function over consumption today (C1) vs con- sumption tomorrow (C2) given by: log(C1) + 0.9log(C2). Suppose the person has access to a savings account that pays back an amount 3%, and has $10to start.

a) Write down the person's budget constraint?

b) What is the person's marginal rate of substitution of consumption today for consumption tomorrow?

c) How much does the person save?

d) Suppose there is a 50% chance of the savings account losing half your money. How much does the person save now?

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Microeconomics: Find person-s marginal rate of substitution of consumption

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Microeconomics: Find person-s marginal rate of substitution of consumption

Reference No:- TGS070046

Have a Question? (oR Write a Review)

Recent Questions Asked Microeconomics

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Request for Solution File

Ask an Expert for Answer!!

Microeconomics: Find person-s marginal rate of substitution of consumption

Reference No:- TGS070046

Recent Questions Asked Microeconomics

Q : What amount the company will need to borrow during april

Q : Determining the joint profit-maximizing level of output

Q : Relevant interest rate for the type of investment

Q : What cash collections in march should be budgeted to be

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Q : What was the owner equity at the end of the year

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