Is this consumer saver or borrower

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Reference no: EM131107371

Suppose a typical worker has the following utility function U(C1C2) =10lnC1 + 20lnC2 where C1 = consumption in period 1,C2 = consumption in perioD 2 and ln is the natural logarithm.

Further suppose that the typical worker earns $210 in period 1 ad $330 in period 2; and that the interest rate is 10%. Assume the typical worker wishes to maximise their lifetime satisfaction.

Is this consumer a saver or borrower? Explain.

Reference no: EM131107371

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