Suppose that Molly from Problem 2 had an income of $600 in period 1 and an income of $880 in period 2. Suppose that her utility function were c^a₁c¹^-^a₂, where a = 0.80 and the interest rate were 10%. If her income in period 1 doubled and her income in period 2 stayed the same, her consumption in period 1 would A) increase by $240. B) stay constant. C) double. D) increase by $480. E) increase by $600.

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The Answer of Suppose that Molly from Problem 2 had an income of $600 in period 1 and an income of $880 in period 2. Suppose that her utility function were c^a₁c¹^-^a₂, where a = 0.80 and the interest rate were 10%. If her income in period 1 doubled and her income in period 2 stayed the same, her consumption in period 1 would A) increase by $240. B) stay constant. C) double. D) increase by $480. E) increase by $600.

Suppose That Molly from Problem 2 Had an Income of $600