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Please answer and explain those questions. 2) Isabella has the following intertemporal utility function for consumption (of YouTube videos): Ut = ut + B(Sut+1 +

Please answer and explain those questions.

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2) Isabella has the following intertemporal utility function for consumption (of YouTube videos): Ut = ut + B(Sut+1 + 82ut+2 + 83ut+3 + ... ) where p, & E [0,1] Suppose Isabella has the following options and the associated utility streams from watching an hour of YouTube videos: Kurzgesagt Crash Course Troom Troom Ut=0 4 2 10 ut=1 10 6 0 Ut=o is the utility gained from watching an hour of video on the day the video is consumed, i.e. immediate benefit. ut=1 is the utility gained from watching an hour of video on the day after the video is consumed, i.e. delayed benefit. a. Assume B = 1 and 8 = 1, and Isabella is allowed to watch YouTube for an hour today. Which of the three channels above will Isabella choose to watch? (0.5 marks) b. Isabella's father tells her: "You can watch for an hour today or for two hours tomorrow." What would Isabella choose? (0.5 marks) c. Suppose 8 = 1. At what value of B would Isabella be indifferent between watching for an hour today and watching for two hours tomorrow? (1.5 marks) d. Suppose Isabella gets the following offer (assume B = 1/2 and 8 = 1): "You can watch for an hour tomorrow or for two hours the day after tomorrow." i. What would Isabella choose? (0.5 marks)

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