Intertemporal Budget Constraint
-Referring to the table above,if consumption in period one is $20,000,then consumption in period two cannot be greater than ________.
A)$52,800
B)$50,400
C)$49,600
D)$50,000

Question

Intertemporal Budget Constraint 
-Referring to the table above,if consumption in period one is $20,000,then consumption in period two cannot be greater than ________.
A)$52,800 
B)$50,400 
C)$49,600 
D)$50,000

Quizplus · Accepted Answer

The maximum consumption in period two is determined by the constraint that total consumption over the two periods cannot exceed a certain limit, which is $70,400. If $20,000 is consumed in period one, then $70,400 - $20,000 = $50,400 is the maximum possible consumption in period two.