The villagers can buy or sell corn at the world price

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The villagers can buy or sell corn at the world price of $1 per bushel, and they can borrow or lend at the world market interest rate of 10%.
The harvest in period "1" is assumed to be 6,000 bushels, the harvest in period "2" is 900, and the village utility function is U = c1c2.

How much will the villagers consume in period 2?


a) c2 will be no more than 2,000 bushels

b) c2 will be more than 2,000 bushels but no more than 2,500 bushels

c) c2 will be more than 3,000 bushels but not more than 3,500 bushels

d) c2 will be more than 3,500 bushels

e) c2 will be more than 2,500 bushels but not more than 3,000 bushels

Reference no: EM13678022

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