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This Q is on two period model. Please show working for part (c ) and (d). 1. A maximizing consumer lives for two periods earning
This Q is on two period model. Please show working for part (c ) and (d).
1. A maximizing consumer lives for two periods earning m1=84 and m2=45 has utility function u=c1c2 and can borrow or save at r=25% c. Interest rates rise to r=80%. What should she do? d. Illustrate the Hicksian income and substitution effects for this change. 1. A maximizing consumer lives for two periods earning m1=84 and m2=45 has utility function u=c1c2 and can borrow or save at r=25% c. Interest rates rise to r=80%. What should she do? d. Illustrate the Hicksian income and substitution effects for this change
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