Suppose a consumer's utility function is U(F0, F1) = F00.5F10.5, where F0 represents food consumed this year and F1 represents food consumed next year. For that utility function, the marginal utility of food consumed this year is 0.5 × (F1/F0)0.5 and the marginal utility of food consumed next year is 0.5 × (F0/F1)0.5. Suppose the consumer earns $100 this year and nothing in the next, food costs $1 per unit in both years, and the interest rate is 10%. How much food does she consume this year, and how much does consume tomorrow?
A. She consumes 45 units of food this year and 55 units of food next year.
B. She consumes 50 units of food this year and 50 units of food next year.
C. She consumes 55 units of food this year and 50 units of food next year.
D. She consumes 50 units of food this year and 55 units of food next year.
D. She consumes 50 units of food this year and 55 units of food next year.
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