Question 2 (40 points) Morgan, an undergraduate student majoring in economics, has perfect substiw tut-e preferences over her consumption in period 1 and period 2. Her preferences are represented by the following utility function, (HQ, (:2) : (:1 + C2. Let's as~ sume that a period is a day. Her daily income is $20 on day 1 and $40 on the second day. On the rst day while she was on her way to school, she stops by a store and nd a book that is for sale for $12 and she is certain that she can sell it for $20 next day. She derives no consumption from the book, and it costs her nothing to keep it for one day. Question 2 Part a If she can't borrow and lend, should Morgan purchase the book? Question 2 Part b If Morgan can borrow and lend at an interest rate of 50%, should she buy the book