Section 5: Long-Form Questions [10 points each! Your long-form answers should be typed or neatly hand-writtenldrawn. Please place your name and netid on each page. You will submit a single .pdf le, containing clearly labeled answers (and associated work) to both LF questions. It is important that you use an actual scanner or mobile pdf scanner (e.g., Adobe Scan) to scan your work. If you simply take a photo using your phone, I will deduct points. Your long-form answers should be in your words. You may work through ideas with your classmates, but I should not receive overly similar answers in different handwriting. Be concise with your responses. A long answer does not equate a good answer. 24. At present, an individual is set to receive $20 today and $30 tomorrow and can borrow or lend at a rate of 20%. His intertemporal utility function is represented by u(x1, x2) = 1 1 xi xi, where x1 is the amount an individual chooses to consume today and I2 is the amount an individual chooses to consume tomorrow. The individual also faces a human-capital production function 29612 + x5 = 1700. A. What consumption today and tomorrow will maximize the individual's lifetime income? B. In tomorrow's dollars, what is the individual's maximal lifetime income? C. What consumption today and tomorrow will maximize the individual's lifetime utility? D. Make a general graphical argument (i.e., relying on the graphical approach to optimization in this model and not necessarily specic to this exact utility function) as to whether an increase in the interest rate will increase or decrease an individual's nal consumption today. If it is impossible to determine, show how an identical increase in the interest rate can lead to an increase or a decrease in today's consumption