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2. A consumer lives for tvvo periods. Assume the following values apply: I1 = 15D, income received in period 1; I2 = 423, income received
2. A consumer lives for tvvo periods. Assume the following values apply: I1 = 15D, income received in period 1; I2 = 423, income received in period 2; r 0.5, interest rate. The consumer maximizes his utility, given by the function, U031. [32} = $1161 + intfz, where C1 and C: represent consumption in periods 1 and 2, respectively. Given the values of 11, 12, and r, the consumer's lifetime budget constraint is (1.5}(15 Cl} + 423 C3 = D. ________l._ ____ .____________ __ -,._r- :1) Now, if the consumer wishes to be a borrower in period 1, then the amount that he can borrow is limited to $53. Thus, Ci I1 5 5D . Setup the Mfmction and use the firstorder conditions and the complementary slscloress conditions to solve the consumer's problem. (Don't mess with second order conditions)
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