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Sara is choosing her lifetime consumption plan. Her income when young (income in period 1) is w 1 =400. After she retires, her income drops
Sara is choosing her lifetime consumption plan. Her income when "young" (income in period 1) is w1=400. After she retires, her income drops to zero w2=0(income in period 2). Sara's utility function is U(c1,c2)=lnC1+1/(1+ )lnC2 and discount rate is =2
-In the consumption space, mark Sarah's endowment point and depic intertemporal budget set, assuming interest rate r=200%. What is the slope of the budget line? Find the present and future value of Sarah's income and show them in the graph.
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