Two months ago, Air-tite Corporation purchased 5,500 pounds of Hydrol, paying $18,700. The demand for this product has been very strong since the acquisition, with the market price jumping to $4.05 per pound. (Air tite can buy or sell Hydrol at this price.) The company recently received a special-order inquiry, one that would require the use of 5,100 pounds of Hydrol.

Which of the following is (are) relevant in deciding whether to accept the special order?

A. The 400-pound remaining inventory of Hydrol.
B. The $4.05 market price.
C. The $3.40 purchase price.
D. 5,500 pounds of Hydrol
E. Two or more of the other factors are relevant.

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?