In consumer utility maximization problems

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Which of the following statements is correct?

a. In a consumers’ utility maximization problems over current and future consumption goods, a higher rate of return r produces substitution and income effects that cause a decrease in quantity demanded of future consumption goods.

b. In a consumer’s utility maximization problems over current and future consumption goods, a higher rate of return (‘r’) produces substitution and income effects that cause an increase in quantity demanded of current consumption goods.

c. In a consumer’s utility maximization problem over current and future consumption goods, a higher rate of return (‘r’) produces substitution effects that that favor more saving and income effects that favor less.

d. All of the above.

Reference no: EM131107489

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