Question: Consider the followingtwo-period problem for the representative consumer Y1 = 50 T1 = 10 Y2 = 50 T2= 6 r= 0.10 C1 = consumption in

Consider the followingtwo-period problem for the representative consumer

Y1 = 50

T1 = 10

Y2 = 50

T2= 6

r= 0.10

C1 = consumption in the first period

C2 = consumption in the second period

S= saving in the first period

U(C1, C2) = 2 ln(C1) + 3 ln(C2)

What is the optimalsaving, S*, that maximizes the representativeconsumer's lifetimeutility?

A.

+8

B.

+12

C.

-8

D.

-2

E.

None of the above

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