Can we predict which one enjoy higher level of consumption

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Reference no: EM131504978

Question: Two individuals have the same tastes vis-à-vis consumption now and in the future, and the same endowment of resources. One of them can engage in home production at a constant rate of return of 5 per cent, but is excluded from the capital market to which the other has access and where the rate of interest is 6 per cent. Can we predict which one will enjoy the higher level of consumption in the initial period?

Reference no: EM131504978

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