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Consider a two period choice model with perfect capital markets with per period interest rate r = 0.2 and income m1 = 90 available in
Consider a two period choice model with perfect capital markets with per period interest rate r = 0.2 and income m1 = 90 available in period 1 for consumption or saving. The utility function is, u(c1,c2) = lncl + 0.81n (:2. (a) Write the formula for the budget line. In other words, what is c2 written as a function of c1? (b) Solve for the optimal amounts of consumption in each period, (31 and 62
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