An individual receives a one-time, unexpected bonus of $2,000. They have no other income in the current period or the next. They can save any portion of this bonus for the next period, but the savings will not earn any interest. If this individual has zero intrinsic impatience, how will they allocate their consumption between the two periods?

Analyzing Consumption Choices

Interpreting Consumption Behavior

An individual receives a one-time payment of $500 and expects no future income. They can save any amount of this payment for the next period without earning interest. If they choose to consume $300 in the current period and save $200 for the future, their behavior is consistent with having zero intrinsic impatience.

Comparing Consumption Choices and Impatience

Revealing Preferences through Action

An individual receives a one-time endowment of $100 and expects no future income. They can save any portion of this money for the next period, but the savings will not earn any interest. Match each potential consumption choice with the type of time preference it reveals.

Analyzing Economic Inefficiency

Consumption Smoothing with Future Income

Consumption Smoothing with Uneven Income