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In an Isolated Peasant Village, the Only Crop Is Corn

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Essay

In an isolated peasant village, the only crop is corn. Good harvests alternate with bad harvests. This year the harvest will be 1,000 bushels. Next year it will be 150 bushels. There is no trade with the outside world. Corn can be stored, but rats will eat 25% of what is stored in a year. The villagers have the Cobb-Douglas utility function U(c1, c2) = c1c2, where c1 is consumption this year and c2 is consumption next year.
a. Draw a budget line for the village with this year's consumption on the horizontal axis and next year's consumption on the vertical axis. On your graph show the quantities at which the budget line intercepts the vertical and horizontal axes.
b. How much will the villagers consume this year?
c. How much will the rats eat?
d. How much will the villagers consume next year?


Definitions:

Complex Eye

A type of eye structure found in some animals, consisting of numerous individual light-sensitive units, allowing for the perception of detailed images.

Antagonistic Pleiotropy

The condition that occurs when a mutation with beneficial effects for one trait also causes detrimental effects on other traits.

Net Fitness Effect

The overall impact of an allele or trait on an organism's reproductive success and survival across its lifespan.

Allele

One of any number of alternative forms of the DNA sequence of the same locus.

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