Answer C$.$

c$.$ Suppose a typical worker has the following utility function: $U(C_1,C_2)=10C_1^2+20C_2^2$ where $C_1=$ consumption in period $1,C_2=$ consumption in period $2$ and $ln$ is the natural logarithm. Further suppose that the typical worker earns $$200$ in period $1$ and $$300$ in period $2$; and that the interest rate is $50\%.$ Assume the typical worker wishes to maximise their lifetime satisfaction.

i$.$ Solve for $C_1^{**}$ and $C_2^{**}$ the optimal levels of consumption in each period.

$[14$ marks$]$

ii$.$ Is this consumer a saver or borrower? Explain.

$[3$ marks$]$