How does it compare to the path if they accept it

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In a ten-hunter village, Hunter 10 loses her arrow at the end of Week 0. From the beginning of Week 1 she permanently switches to arrow-making, and makes one arrow per week. The hunters from a nearby village, where deer kills per capita are much higher, have offered one of their deer for Week 1 - in exchange for a promise to give one deer from our village's hunt of Week 3. Assume that each arrow kills exactly one deer, no matter how many arrows the hunter has (constant marginal productivity of capital). In other words a hunter with 3 arrows will kill 3 deer, with 4 arrows 4 deer, etc. What is the path of consumption over time in this village - i.e. what is consumption in Week 0, Week 1, Week 2, etc. - if they refuse the offer? How does it compare to the path if they accept it?

Reference no: EM132472935

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