Question: A person has a utility function U ( c 1 , c 2 ) = c 1/2 1 + 0.80 c 1/2 2 where c

A person has a utility function U(c1,c2) =c1/21+ 0.80c1/22 where c1is consumption in period 1 and c2is consumption in period 2. Income in period 1 is 3 times as large as income in period 2. At what interest rate will they choose to consume the same amount in period 1 as in period 2?

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