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(15) Smith receives $100 of income this period and $165 next period. His utility function is...

  1. (15) Smith receives $100 of income this period and $165 next period. His utility function is given by U=Xα Y1-α, where X is consumption this period and Y is consumption next period. When the interest rate was 10%, his consumption was (C1*, C2*)=(100, 165).
    1. 7) Find the value of α.
    2. (8) If the interest rises to 50%, what would be the optimal consumption bundle?
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