Question: 2. [14 Marks] Consider a two-period model of intertemporal choice. In each period i = 1, 2, the consumer has income m, > 0 and

2. [14 Marks] Consider a two-period model of intertemporal choice. In each period i = 1, 2, the consumer has income m, > 0 and makes a consumption choice r; 2 0. The price of the consumption good is 1 dollar in both periods. The consumer can save her period 1 income or borrow against her period 2 income at interest rate r > 0. The consumer's utility from consumption path (T1, 12) is $152 , B1 8. where 0

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