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Consider an individual who lives two periods. He works in both periods and receives a labor...

Consider an individual who lives two periods. He works in both periods and receives a labor income of 200 euros in the first period and 220 euros in the second. The interest rate of the economy is 10%. The consumption in period 1 is c1, and in period 2 it is c2. The price of the consumption good is 1 in both periods. The utility function of this individual is U(c1,c2 )=c11/2c21/2. Suppose there is a proportional tax on labor income of 1/11 (i.e., 9.09091%).

What is the optimal consumption in period 2?

Select one:

a. 186.92

b. 181.81

c. 180

d. 190.91

e. 200

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