Question: QUESTION 11 Consider the following intertemporal consumption problem with one good and two periods. The quantity of the good consumed in period 1 and period

QUESTION 11 Consider the following intertemporal consumption problem with one good and two periods. The quantity of the good consumed in period 1 and period 2 are q1 and qz. The price of each unit of the good is $1 in both periods. The consumer's income is |1=10 in the rst period and |2=12 in the second period. The consumer can borrow or save money at the interest rate of 25%, that is, r=0.25. The consumer's utility function is u(q1.q2) = C71 6/2 The consumer optimally chooses q1 and q2. Part 1) The optimal mix of q1 and q2 is c (your answer should be q2 as a function of q1). Part 2) The consumer will purchase q1 = 3 (your answer should be a number). Part 3) In the rst period, the consumer will c (select save or borrow) the amount of $ 6 (select a number)

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