Staying power refers to the: relative abilities of parties in a situation to exert influence over each other. relative abilities of parties in a situation to exert influence over each other. ability of a firm to produce a good or service at a lower opportunity cost than a rival. ability of a firm to produce a good or service at a lower opportunity cost than a rival. long-term viability of a product or service. long-term viability of a product or service. physical demands required to run a product or service. physical demands required to run a product or service. ability to take advantage of complementary products developed for a prior generation of technology.

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?