Exercise 23-7 rensing ltd. estimates sales for the second quarter of 2017 will be as follows. month units april 2,600 may 2,470 june 2,320 the target ending inventory of finished products is as follows. march 31 2,030 april 30 2,200 may 31 2,130 june 30 2,380 2 units of material are required for each unit of finished product. production for july is estimated at 2,600 units to start building inventory for the fall sales period. rensing’s policy is to have an inventory of raw materials at the end of each month equal to 70% of the following month’s production requirements. raw materials are expected to cost $4 per unit throughout the period. calculate the may raw materials purchases in dollars. raw material purchases cost

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?