Cully furniture buys 2 products for resale: big shelves and medium shelves (m). each big shelf costs $500 and requires 100 cubic feet of storage space, and each medium shelf costs $350 and required 90 cubic feet of storage space. the company has $75,000 to invest in shelves this week, and the warehouse has 18,000 cubic feet available for storage. profit for each big shelf is $300 and for each medium shelf is $150.this is a maximization model. truefalse

3. saving two consumers, larry and jeff, have utility functions defined over the two periods of their lives: middle age (period zero) and retirement (period 1). they have the same income in period 0 of m dollars and they will not earn income in period 1. the interest rate they face is r. larry’s and jeff’s utility functions are as follow. = 0.5 + 0.5 and = 0.5 + 0.5 for each person is between zero and one and represents each consumer’s temporal discount econ 340: intermediate microeconomics. ben van kammen: purdue university. rate. a. write the budget constraint that applies to both jeff and larry in terms of consumption in each period and ), interest rate, and m. b. what is larry’s and what is jeff’s marginal rate of intertemporal substitution? c. what is the slope of the budget constraint? d. write each consumer’s condition for lifetime utility maximization. e. re-arrange the conditions from part (d) to solve for the ratio, . f. if > which consumer will save more of his middle age income? g. if > 1 1+ , in which period will larry consume more: = 0 or = 1?