Asked on 9 Aug 2018

Consider 2 consumers, each with endowment (100, 220).

Biff has utility function u(x, y)= xy
Baff has utility function U(x, y)= ln x +4 ln y

Compare their choices and utility when facing interest rate 10% per period versus facing interest rate 25% per period.

Answered on 9 Aug 2018

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