A consumer's income in the current period is = 50 and in the future period is = 200. There are no taxes in this economy hence = = 0. The consumer prefers to have perfectly smooth consumption so consumer's optimal consumption rule is given by: = . The real rate of interest in this economy is = 0.1

(a) Draw the consumer's life-time budget constraint and identify endowment point. Please indentify the horizontal and vertical intercepts of budget constraint in the diagram. (2 marks)