In the two-period utility maximization model the opportunity cost of one unit of C1 is
a. one unit of C0.
b. 1 + r units of C0.
c. 1/(1 + r) units of C0.
d. cannot be determined without more information.
c
Economics
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Recall the Application. Assume that immediately before the housing bubble burst, you purchased a $250,000 home and took out a $225,000 mortgage to make the purchase. When the bubble burst, the value of your home fell by 20 percent
The value of the home is now ________ and you owe the mortgage company ________. A) $180,000; $225,000 B) $200,000; $180,000 C) $200,000; $225,000 D) $180,000; $200,000
Economics
Refer to the game in Scenario 13.7. If each player chose a maximin strategy, the outcome would be
A) $69,000, $69,000. B) $0, -$1000. C) -$1000, $0. D) $0, $0. E) a mixed strategy equilibrium.
Economics