Ymir Larson Farms near Niffleheim, Minnesota

Essay

Ymir Larson farms near Niffleheim, Minnesota. He works 80 hours a week. He can either grow rutabagas or raise pigs. Every hour that he spends growing rutabagas gives him $2 of income this year. Every hour that he spends raising pigs this year will add $4 to his income next year. In fact, next year's weekly income will be 100 + 4H dollars where H is the number of hours he spends raising pigs this year. Ymir's utility function is U(c₁, c₂) = min{c₁, c₂}, where c₁ and c₂ are his consumption expenditures this year and next year. Ymir doesn't believe in banks and will neither lend money nor borrow money.
a. Draw Ymir's budget line for current and future consumption, labeling key points on it.
b. How many hours a week will he choose to spend raising pigs?
c. How much money will he spend per week on consumption in each year?