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a) Using this information, compute D along with rent R and the owner-occupier's user cost. Note that the user cost is given by the usual
a) Using this information, compute D along with rent R and the owner-occupier's user cost. Note that the user cost is given by the usual formula, even though a down payment is present. Your answer should show that the owner-occupier's user-cost is less than rent. Note that, to benefit from this lower second-period housing cost, the consumer must save funds for a down payment in the first period. Whether the lower housing cost makes it worthwhile to undertake this saving depends on the consumer's patience, as you will see below. b) Using the formulas above, compute ci and c2 for an owner-occupier
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