Given the utility function U = ln c + (0.25) ln c'

and the budget constraint

c + c'/(1+r) = y + y'/(1+r)

where y=100 and y'=120 and the interest rate r = 0.05

What is the optimal value of current consumption c*? Show all steps.

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Divya SinghLv10

28 Sep 2019

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