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Quick and easy 3 questions! Anything helps thank you! 2 Two-Period Model Cookie Monster lives for two periods (period t = 0 and 1. In

Quick and easy 3 questions! Anything helps thank you!

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2 Two-Period Model Cookie Monster lives for two periods (period t = 0 and 1. In what follows, subscript , denotes period). He earns yr, pays t, for tax and consumes c, baskets of numeraire composite goods in each period. He will choose (co, c.) to maximize his utility level under his (usual) budget constraint. Now suppose that Cookie Monster faces an addi- tional constraint. He can: (a) neither save or borrow. (b) save but not borrow. (c) borrow but not save. 1. * 3x3 With co on the horizontal axis and c, on the vertical axis, shade in the set of affordable bundles in each case above. 2. *Ak 3x3 In each case in item 1, fill in in- difference curves where the additional constraint will not affect his consumption choice. Namely, present a case where he will choose (co, c*) whether he faces the additional constraint or not. 3. * * *|8 Consider item (c). Suppose that unlike item 2, (ca, c*) falls outside the area you shaded in item 1. Can the government help him still choose (co, ci) while keeping to their own budget con- straint? If so, how? If not, why not

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