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Suppose the lifetime utility of a consumer is represented by the utility function U(c, c') =c*c'^0.5 Maximize (1) with respect to c and c' subject
Suppose the lifetime utility of a consumer is represented by the utility function
U(c, c') =c*c'^0.5
Maximize (1) with respect to c and c' subject to the lifetime budget constraint
c' = (1 + r)we - (1 + r)c
and prove that the consumer's utility maximizing bundle must satisfy
1 + r = 2(c'/c)
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