Question: Please Show Work 9. [8] Mile has the utility function U (:1. c2) = cits + 1.1.235 where c, and c; are her consumption in
Please Show Work
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9. [8] Mile has the utility function U (:1. c2) = cits + 1.1.235 where c, and c; are her consumption in periods 1 and 2, respectively. She will earn $100 in period 1 and $110 in period 2. She can borrow or save at an interest rate of 10% and the price of the consumption good is $1 in each period. a. [2] Draw her budget line on a graph. (Note: Make sure to label everyling dearly, including the equation for her budget line and intercepts]. b. [4] Solve for her optimal level of consumption in each period. Is she a saver or borrower? Add an indifference curve that depicts her optimal choice to your diagram from partlb}. c. [2] Is it fair to sayr that Nila values future consumption more than current consumption? Briey, expia in your reasoning
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