# 3. Consider a intertemporal choice problem for a saver. Say the saver has some amount of...

###### Question:

3. Consider a intertemporal choice problem for a saver. Say the saver has some amount of wealth today given by w > 0, can consumer or save this wealth, and if they save the wealth, on savings they receive a return of r> 0 on every unit of wealth invested. Preference are U(C,C2) = u(c) + Bu(C2) where the discount factor is B E (0, 1) and the utility function u(c) = c. a. If you over this consumer 1 unit of wealth today vs 1 unit of wealth tomorrow, which does she prefer? b. What is this consumers 2 period consumption-savings problem? c. Explain how this problem is related to a standard "static" consumer choice problem for "two goods". d. What is the single first order condition for this problem?

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