Two balloons contain the same amounts of water, sugar, and yeast. two other balloons contain the same amount of water, but have no sugar or yeast. the following picture shows the balloons. on the left, an illustration of a bright light being shone onto two balloons, one labeled '1 water' and the other labeled '2 water, sugar, and yeast.' on the right, an illustration of a large bucket labeled 'ice water.' inside the bucket, sitting on top of the icy water, are two balloons, one labeled '3 water' and the other labeled '4 water, sugar, and yeast.'which balloon would you predict will get bigger the fastest?

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?