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Clifford lives by the motto​ "Eat, drink, and be merry​ today, for tomorrow​ doesn't matter." If​ today's consumption is represented by​ "x" and​ tomorrow's consumption is represented by​ "y," then which of the following best represents​ Clifford's utility​ function?A) U=x-y
B) U=x/y
C) U=x
D) U=y

Respuesta :

jepessoa

Answer:

C) U = x

Explanation:

Since Clifford's motto focuses on present joy and consumption, we can assume that his marginal propensity to consume is 1 and his marginal propensity to save is 0 (even if saving only for 1 day). Clifford will spend all his money in today's consumption, therefore, his utility function U = x, since there is no tomorrow. Ans the cycle repeats itself day after day.

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