Adwoa's friend tells her that 2001: Space Odyssey is good. Adwoa is trying to decide between reading the book and watching the movie. Assume that the...

Adwoa's friend tells her that 2001: A Space Odyssey is good. Adwoa is trying to decide between reading the book and watching the movie.

Assume that the movie yields an immediate utility of 1 in the single period (single day) during which Adwoa watches it, and a utility of 0 thereafter.

Assume that the book yields a utility of 0.1 for each of 100 periods during which she reads it, and a utility of 0 thereafter.

t=u(ct)+β∑i=t+1∞δiu(ci), representing the fact that she discounts the utility of future consumption.

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Adwoa's friend tells her that 2001:}! Space Odyssey is good. Adwoa is trying to decide between reading the book and watching the movie. Assume that the movie yields an immediate utility of 1 in the single period (single day) during which Adwoa watches it, and a utility ofCIthereafter. Assume that the book yields a utility of 0.1 for each of 100 periods during which she reads it, and a utility of D thereafter. 00 Adwoa's utility function at timet is U; = u(c,g) + ,8 Zi=t+1 Janka, representing the fact that she discounts the utility of future consumption. First, suppose that ,8 = 0.5 and 6 = 0.92. What is Adwoa's present value of seeing the movie today? What is Adwoa's present value of reading the book, starting today?