utility functions U(c1, c2) = c1C2, where c1 is consumption this year and c2 is consumption next year. Rats eat 10% of any grain that is stored for a year. How much grain could the villagers consume next year if they consume 1,000 bushels of grain

utility functions U(c1, c2) = c1C2, where c1 is consumption this year and c2 is consumption next year. Rats eat 10% of any grain that is stored for a year. How much grain could the villagers consume next year if they consume 1,000 bushels of grain

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

In an isolated mountain village, the harvest this
year is 3,000 bushels of grain and the harvest next
year will be 1,100 bushels. The villagers all have
utility functions U(, c2) = cqc2, where cq is
consumption this year and c2 is consumption next
year. Rats eat 10% of any grain that is stored for a
year. How much grain could the villagers consume
next year if they consume 1,000 bushels of grain
this year?
Group of answer choices
2,900 bushels
1,800 bushels
4,100 bushels
4,350 bushels
1,200 bushels

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