Question: 4. Consider a consumer with the following utility function U=C0.75 0.25 U(C1,C2) = 1 2 a. Derive an expression for the MRSClCZ Assume the consumer

4. Consider a consumer with the following utility function U=C0.75 0.25 U(C1,C2) = 1 2 a. Derive an expression for the MRSClCZ Assume the consumer receives income in two periods - M1 = 100 and M2 = 120. Also, assume that the interest rate on borrowing and saving is 5 per cent. b. Calculate how much this person will either borrow or save. (Tip set MRS = to the slope of the budget constraint and solve for C2. Substitute the expression back into the budget constraint.)

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