$$\text { The condition } M R S _ { C } , C ^ { \prime } = 1 + r \text { describes the representative consumer's }$$
A)future consumption-savings decision.
B)current period work-leisure decision.
C)investment decision.
D)future period work-leisure decision.
E)current consumption-savings decision.

Question

Quizplus · Accepted Answer

The equation MRS$_C$, C$^\prime$ = 1 + r represents the marginal rate of substitution between consumption in two different time periods (present and future) for the representative consumer. This means that the consumer is deciding how much to consume now and how much to save for the future. Therefore, the correct answer is E) current consumption-savings decision.

The condition MRSC,C′=1+r describes the representative consumer’s \text { The condition } M R S _ { C } , C ^ { \prime } = 1 + r \text { describes the representative consumer's } The condition MRSC​,C′=1+r describes the representative consumer’s

$\text { The condition } M R S _ { C } , C ^ { \prime } = 1 + r \text { describes the representative consumer's }$