In the two-period consumption model, a consumer’s preferences and optimum levels of consumption are analyzed using the intertemporal choice framework, which considers consumption and savings decisions over two time periods—typically referred to as the present period (period 1) and the future period (period 2). The model assumes that a rational consumer seeks to maximize utility derived from consumption in both periods, subject to an intertemporal budget constraint determined by income and interest rates. Consumer preferences in this model are represented by a utility function (U(C_1, C_2)), where (C_1) and (C_2) denote consumption in period 1 and period 2, respectively. The utility function is assumed to be increasing in both arguments, reflecting that more consumption in either period provides higher satisfaction. It is also typically concave in each argument, indicating diminishing marginal utility of consumption. This means that as consumption in a particular period increases, the additional satisfaction gained from an extra unit of consumption decreases. To visualize consumer preferences, we use indifference curves in the (C_1)-(C_2) space. Each curve represents combinations of current and future consumption that provide the consumer with the same level of utility. Indifference curves are downward sloping because an increase in consumption in one period must be offset by a reduction in consumption in the other period to keep utility constant. They are convex to the origin, reflecting diminishing marginal rate of substitution (MRS) between current and future consumption. The MRS is defined as the rate at which a consumer is willing to trade future consumption for current consumption without changing the level of overall utility, formally given by (\text{MRS}_{12} = \frac{MU_1}{MU_2}), where (MU_1) and (MU_2) are the marginal utilities of consumption in period 1 and period 2, respectively. The consumer’s