Use calculus to derive a formula for optimal consumption

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Given the utility function U = 4lnC1 + 3lnC2 , use calculus to derive a formula for optimal consumption in period 1 (C1*) and period 2 (C2*), each as a function of the income in each period (M1 and M2), and interest rate r. Then find a formula for the amount borrowed, C1* - M1. Note that this is positive for a borrower and negative for a saver.

Reference no: EM131084746

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Use calculus to derive a formula for optimal consumption : Given the utility function U = 4lnC1 + 3lnC2 , use calculus to derive a formula for optimal consumption in period 1 (C1*) and period 2 (C2*), each as a function of the income in each period (M1 and M2), and interest rate r. Then find a formula for th..

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